Supply Chain Selection and Assessment

In addition to formulating relevant internal procurement regulations, TWM has set rules and regulations on corporate sustainability for the suppliers to abide by.The regulations include:Guidelines on Corporate Social Responsibility for Suppliers, Code of Information Security Management, Regulations on Safety, Health and Environmental Protection, Confidentiality and Protection of Intellectual Property Rights as well as the rewards and penalties. Among them, Guidelines on Corporate Social Responsibility for Suppliers are built on the conventions of International Labor Organization and applies to all suppliers.

TWM's supplier management system covers 5 dimensions:

Classified Management of Suppliers

Selection of New Suppliers

Supplier Maintenance

Threshold for major tenders

Training Programs

New suppliers review and supplier maintenance

TWM started to implement "Self-Evaluation form for ESG Performance for New Suppliers" since 2017, focusing on ESG status such as environmental protection, labor human rights and legal compliance. The questionnaire is modified each year in line with the latest trends in sustainability. In 2020, 133 new suppliers submitted the self-evaluation. All existing/potential suppliers that can be tracked and managed by TWM are required to fill in the initial ESG self-assessment form. For major tenders, the ESG questionnaire submitted by suppliers must be reviewed by a third-party consultant. Only those who pass the threshold can receive bids.

In the meantime, all suppliers have to comply with "Taiwan Mobile Guidelines on Corporate Social Responsibility for Suppliers." New suppliers are required to sign the "Declaration of Integrity in Business Conduct," with the outreach reaching 99% for suppliers complying with social responsibilities in 2020.

Contractors are required to sign the "Standard Operating Procedures for Safety, Health and Environmental Protection Management for Contractors" after reading the "Environmental and Occupational Health and Safety Policy for Contractors" when taking on tenders. The signing rate of the guarantee was 100% in 2020.

Supplier sustainability management and assessment

Supplier ESG review targets

To stay updated with the ESG performance of suppliers, TWM has set the management cycle every at three years, with mechanism of desk reviews, on-site autids, KPIs-setting and risk improvement tracking plans. TWM aims at maintaining the review coverage for tier-1 suppliers at above 80%, and at increasing the coverage of on-site audits for critical tier-1 suppliers to 85%. TWM keeps the target of maintaining improvement tracking for high-risk manufacturers at 100%.

ESG questionnaire distribution

The 2020 TWM ESG self-assessment questionnaire covers18 categories of issues related to sustainability, including economic, environmental, and social aspects. The questionnaire has been modified to meet international trends including the emergence of new sustainability issues such as the COVID-19 pandemic, human rights protection and greenhouse gas management. Before the questionnaire is handed out, education and training was provided to the procurement staff and suppliers to clarify the management focus, content and key points of the year. In 2020, 346 questionnaires were collected.

Desk review

Suppliers must give answers about their current management as well as providing supporting information, before third-party agency entrusted by TWM conducts a desk review and gives an objective score. A total of 346 questionnaires were assessed this year. The suppliers were given feedback together with their ratings to encourage them to improve their performance in terms of sustainability. We also regularly evaluate critical tier-2 suppliers to enlarge the scale of sustainable supply chain cooperation. In 2020, 6 tier-2 suppliers were reviewed.

On-site audit

TWM selected 40 critical or high-risk suppliers for on-site audit to gain an in-depth understanding of the supplier ’s sustainable management practices, as well as understanding their obstacles in implementing ESG in order to propose precise and practical suggestions for improvement. To improve the understanding of the critical tier-1 suppliers, TWM has greatly increased the target of the three-year cumulative field visits to 85%. The Company hopes to continue to reinforce the relationship with suppliers and promote sustainable actions through on-site visits. In 2021, on-site autids are expected to be conducted on 40-45 critical/high-risk suppliers.

Selection method Number of assessment Number of suppliers (supply chain) with negative impact Proportion of suppliers with negative impact being included in the improvement plan Proportion of suppliers with negative impact terminating cooperation
Environmental Impact Assessment 346 0 - 0
Social Impact Assessment 346 1 100% 0
Economic Impact Assessment 346 3 100% 0

Sustainable risk assessment and improvement action plan

In addition to evaluating the ESG implementation of existing suppliers, TWM identifies and tracks changes in the supply chain sustainability risks (such as the probability of threat, potential impact, warnings in advance, etc.) through the sustainability risk assessment in order to assess the threat and impact of these risks on TWM in advance. In 2021, the main supply chain risk has been identified as information security risks.

TWM has identified 19 high-risk suppliers in 2018 and completed 100% on-site reviews in 2020. The five high-risk suppliers identified in 2019 have reached 100% review rate in 2020 (excluding two vendors that we no longer worked with in 2020). In 2020, a total of 346 TWM suppliers were assessed for sustainability risks with two companies with high economic risks and 1 company with high social risks identified. The follow-up reviews are expected to be completed at 100% in 2022.

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Supply Selection and Assessment