Supplier Selection and Assessment

  • Implemented ESG criteria for major tenders and set an ESG rating threshold
  • Reviewed the ESG self-assessment questionnaires of 355 suppliers and conducted on-site audits of 41 suppliers
  • 100% signing rate of the "Safety, Health and Environmental Protection Guarantee for Contractors"

Supply chain management system

In addition to the procurement management measures, TWM has formulated relevant sustainability rules and regulations for suppliers, which include: Guidelines on Corporate Social Responsibility for Suppliers, Code of Information Security Management, Regulations on Safety, Health and Environmental Protection, and Confidentiality and Protection of Intellectual Property Rights. Among them, the suppliers corporate social responsibility is built on the conventions of the International Labor Organization and apply to all suppliers.

International Integration - Supplier ESG Questionnaire

In 2021, TWM ESG questionnaire has 18 categories of sustainability-related topics, covering economic, environmental and social aspects. Considering the possible use of precious metals in the equipment procurement in telecommunications industry and the norms of international laws and regulations, a new conflict mineral survey was added to the TWM topic group of "Supplier Management" in 2021, which required the disclosure of the statement of prohibiting conflict minerals, traceability investigation and investigation report, so as to enhance the transparency and sustainable performance of TWM's supply chain.

New supplier review

TWM continues to implement the "ESG Performance Self-Assessment Form for New Suppliers" to investigate the current situation of ESG implementation in environment, labor and human rights, and compliance with laws and regulations. In 2021, a total of 106 new suppliers completed the assessment and signed the "Declaration of Integrity in Business Conduct". All suppliers have to comply with the "TWM Corporate Social Responsibility for Suppliers." Suppliers are required not to conduct bribery and other inappropriate business conducts, and violation could cause termination or removal of cooperation. In 2021, the corporate social responsibility reached an engagement rate of 100% of Taiwanese suppliers. Contractors are also required to sign the "Safety, Health and Environmental Protection Guarantee for Contractors" after reading the "Standard Operating Procedures for Safety, Health and Environmental Protection Management for Contractors". The signing rate of the guarantee was 100% in 2021.

All suppliers that can be tracked and managed by TWM are required to fill out the ESG self-assessment form. For major tenders, the ESG questionnaire must be reviewed by a third-party consultant. Only those who meet the threshold can receive tender documents.

Audit items Applicable to 2021 number of suppliers reviewed 2021 completion rate
Signing the "Declaration of Integrity in Business Conduct” All Suppliers 846 100% signing rate
Signing the “Safety, Health and Environmental Protection Guarantee for Contractors" Engineering suppliers 95
Fill out new suppliers ESG questionnaire All new suppliers 106 100% of return rate

Supplier ESG review targets

TWM has set a three-year cycle that entails document reviews, on-site audits, the setting of KPIs, and risk improvement tracking plans. TWM’s goals are to maintain the document review coverage for Tier-1 suppliers at above 80%, increase the coverage of on-site audits of critical Tier-1 suppliers to 90%, and maintain the tracking of improvements at high-risk vendors at 100%.

Management issues Coverage rates for supplier ESG assessments within 3 years
First-tier supplier document review ratio 80%
Cumulative on-site visit ratio for critical Tier-1 suppliers 90%
Proportion of high-risk suppliers included in improvement tracking 100%

ESG risk and opportunity identification

TWM requires suppliers to conduct self-assessments of their ESG performance, and it also conducts document reviews and on-site visits to confirm the accuracy of the self-assessment results before identifying risks, and output supplier ESG assessment report and improvement suggestions. Suppliers are required to take steps to mitigate risks in high-risk areas.

TWM has continuously upgraded the level of risk management by updating the questionnaire content, and has included human rights and carbon emissions in the assessment items, so as to strengthen the risk identification and early warning of social and environmental aspects.

Through ESG review results, it is helpful to identify suppliers with better sustainable performance and achievements, and to find out suppliers with higher opportunities of circular economy, excellent carbon emission control performance, continuous improvement in sustainability every year, and find opportunities to promote sustainable innovation with supplier partners.

Supplier document review

Suppliers must provide answers on their current management practices as well as supporting information, and then a third-party agency conducts a review. A total of 355 questionnaires were assessed this year. The suppliers were given feedback together with their scores to encourage them to improve their sustainability performance. We also regularly evaluate critical Tier-2 suppliers to expand the scale of cooperation on sustainability within the supply chain. In 2021, ten Tier-2 suppliers were reviewed.

Supplier ESG on-site review

In 2021, TWM selected 41 key suppliers or high-risk manufacturers to conduct on-site examination, so as to gain an in-depth understanding of the current sustainability promotion situation in supplier practices.

TWM has greatly raised the target of three-year cumulative on-site audit of first tier critical suppliers to 90%. Facing the COVID-19 third-level alert in 2021, TWM will change more than half of the on-site audit to online review, and remotely reviewed a total of 25 suppliers.

TWM is expected to conduct 40-45 on-site audit of key suppliers in 2022, hoping to deepen the connection with suppliers and promote sustainability practices through on-site audits.

Sustainability risk assessment and negative impact improvement plan

TWM identifies and tracks changes in supply chain sustainability risks through a sustainability risk assessment to assess the threat and potential impact of these risks to TWM. In 2021, the main supply chain risk was identified as supply chain disruption risk. In response to the supply chain disruption risk, TWM diversified the raw material sources of products and services that may be greatly impacted. TWM also required key suppliers to promote the pandemic-related business continuity management system, and understand the promotion situation through the annual ESG review.

TWM identified 3 high-risk suppliers in 2020 and completed follow-up reviews of all of them in 2021. A total of 353 TWM suppliers were assessed for sustainability risks in 2021, and seven companies with high governance risks were identified. Follow-up reviews of all of them are expected to be completed in 2022.

Selection method Environmental Impact Assessment Social Impact Assessment Governance/Economic Impact Assessment
Number of assessments 353 353 353
Number of suppliers with negative impacts 0 0 7
Proportion of suppliers with negative impacts included in improvement plans - - 100%
Proportion of suppliers with negative impact terminating cooperation - - 0%
Supply Selection and Assessment