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In addition to the procurement management measures, Taiwan Mobile 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.
The 2022 TWM ESG questionnaire design principles refer to "OECD DUE DILIGENCE GUIDANCE FOR RESPONSIBLE BUSINESS CONDUCT", through the design of questionnaires that conform to domestic and international sustainable trends and key sustainable issues in the telecommunications industry, desk and on-site reviews are conducted by 2nd party organizations to understand the current status of supplier implementation, and there are 23 aspects of supplier ESG risk assessment:
| The 2022 supplier ESG questionnaire topics | |
|---|---|
| Governance | 1.Sustainable organization operation |
| 2. Information disclosure | |
| 3. External communication channel | |
| 4. Internal management | |
| 5. Quality management | |
| 6. Supplier management | |
| 7. Conflict Minerals management | |
| 8. ESG audit | |
| 9. ESG education and training | |
| 10. Operational continuity management | |
| 11. Information security | |
| 12. Intellectual property law compliance | |
| 13. Business secret protection | |
| Social | 14. Human Rights |
| 15. Health and safety | |
| 16. Community residents’ consultation | |
| Environmental | 17. Environmental Management system |
| 18. Greenhouse gas management | |
| 19. Environmental protection | |
| 20. Waste Management | |
| 21. Circular Economy | |
| 22. Product packaging | |
| 23. Biodiversity | |
Taiwan Mobile continues to implement the "New Supplier ESG Performance Self-Evaluation Form" to investigate suppliers' ESG implementation status. All collaborating suppliers must comply with the "Taiwan Mobile Supplier Corporate Social Responsibility Code of Conduct" and sign the "Declaration of Integrity in Business Conduct." Those who violate the code will have their partnership terminated. By 2022, the CSR disclosure rate of Taiwanese suppliers must reach 100%. Engineering contractors must also carefully read the "Contractor Safety, Health, and Environmental Management Standard Operating Procedures" and sign the "Safety, Health and Environmental Protection Guarantee for Contractors." The signing rate of the guarantee was 100% in 2022.
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All traceable and manageable suppliers of TWM are required to fill out an ESG questionnaire. The ESG questionnaire must be reviewed by a third-party consultant for major tenders, and only those who meet the threshold can participate in the bid. The ESG score is included in the supplier selection evaluation criteria, with a weighting of 5~10%. Also, the suppliers with better ESG performance are preferred in supplier selection and contract awarding.
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All suppliers that can be tracked and managed by TWMTaiwan MobileTAIWAN MOBILE 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 | 2022 number of suppliers reviewed | 2022 completion rate |
|---|---|---|---|
| Signing the "Declaration of Integrity in Business Conduct” | All Suppliers | 556 | 100% signing rate |
| Signing the “Safety, Health and Environmental Protection Guarantee for Contractors" | Engineering suppliers | 94 | 100% signing rate |
| Fill out new suppliers ESG questionnaire | All new suppliers | 91 | 100% of recovery rate |
Taiwan Mobile 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%.
| KPI Items | Execution Status of KPI Targets | KPI Target Year | |
|---|---|---|---|
| KPI 1 | Tier-1 Supplier written review ratio |
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| KPI 2 | Tier-1 key suppliers on-site review ratio |
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| KPI 3 | Numbers of carbon inventory checks conducted on key suppliers |
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Taiwan Mobile requires its suppliers to self-assess their ESG performance and conducts written and on-site reviews to evaluate the authenticity and implementation status of the self-assessment results. Further risk identification is carried out to produce supplier ESG assessment reports and improvement recommendations. Suppliers are required to take steps to mitigate risks in high-risk areas.
Taiwan Mobile has continuously upgraded the level of risk management by updating the questionnaire content. The 2022 questionnaire included a biodiversity question set, which will strengthen the risk identification and warning functions for social and environmental issues.
Suppliers are required to truthfully answer questions about their management status and provide supporting evidence, which will then be reviewed in writing by a third-party organization. This year, 400 questionnaires have been reviewed to encourage suppliers to improve their sustainability performance. We also regularly evaluate tier-2 key suppliers, and 10 were reviewed in 2022.
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In 2022, Taiwan Mobile conducted an annual procurement analysis to review the procurement amount, set critical thresholds, and reviewed the high-risk suppliers identified last year. A total of 45 suppliers, including key suppliers and high-risk manufacturers, were selected for on-site reviews. TWM raised the target of three-year cumulative on-site reviews of tier-1 key suppliers to 90%
Taiwan Mobile is expected to conduct 40-45 on-site reviews on key suppliers in 2023, hoping to deepen the connection with suppliers and promote sustainability practices through on-site reviews. Detail of the termination timeframe please refer to the Rewards and punishments policy(https://twmepmall.taiwanmobile.com/esp/index)
Taiwan Mobile tracks the sustainability risks of the supply chain through sustainability risk assessments to identify potential risks in advance and implement related risk controls. In 2021, the main supply chain risk was the disruption risk. TWM will continue to pay attention to the raw material sources that may be significantly impacted for products and services. In 2022, the primary supply chain risk is the data security risk. Taiwan Mobile will require suppliers to strengthen their data security management systems and understand their progress through the annual ESG review. However, if the suppliers continuously mark as high-risk in specific issue, the suppliers will be suspended or terminate. Detail of the termination timeframe please refer to the Supplier Operation and Management Guidelines (https://twmepmall.taiwanmobile.com/esp/index)
1st year: request the improvement plans or send out the warning letter if the supplier did not responses relevant improvement plan.
Continuously mark as high-risk in specific issue for 2nd year: suspend from the tender for 6 months.
Continuously mark as high-risk in specific issue for 3rd year: suspend from the tender for a year.
Continuously mark as high-risk in specific issue for 4th year: terminate cooperation.
Taiwan Mobile identified 7 high-risk suppliers in 2021 and completed follow-up reviews of all of them in 2022. In 2022, TWM conducted sustainable risk assessments for 400 suppliers, identifying nine high-risk suppliers in governance. Follow-up reviews are expected to be completed in 2023.
| Selection method | Environmental Impact Assessment | Social Impact Assessment | Governance/Economic Impact Assessment |
|---|---|---|---|
| Number of assessments | 400 | 400 | 400 |
| Number of suppliers with negative impacts | 0 | 0 | 9 |
| Proportion of suppliers with negative impacts included in improvement plans | NA | NA | 100% |
| Proportion of suppliers with negative impact terminating cooperation | NA | NA | 0% |
In 2022, Taiwan Mobile completed 400 supplier desk/on-site assessments; 100% of significant suppliers have completed assessments, including 9 suppliers with actual/potential negative impacts.
TWM also required all suppliers with actual/potential negative impacts to provide Corrective Action/Improvement Plans in 2022, and provides guidance and support on the implementation of corrective and improvement actions remotely to all these suppliers. All suppliers with actual/potential negative impacts responded with Corrective Action/Improvement Plans.
| Supplier Assessment | FY 2022 | Target for FY 2023 |
|---|---|---|
| Number of suppliers assessed via desk assessments/ on-site assessments | 410 | 100% of significant suppliers |
| Percentage of significant suppliers assessed | 100% | TBD |
| Number of suppliers assessed with substantial actual/ potential negative impacts | 9 | |
| Percentage of suppliers with substantial actual/potential negative impacts with agreed corrective action/improvement plan | 100% | |
| Number of suppliers with substantial actual/potential negative impacts that were terminated | 0 | |
| Number of suppliers supported in corrective action plan implementation | 9 | |
| Percentage of suppliers assessed with substantial actual/potential negative impacts supported in corrective action plan implementation | 100% | 100% |
Besides general supplier management and improvement tracking mechanisms, TWM has actively engaged in providing supplier capacity building programs. In 2022, 199 suppliers capacity building programs were offered by TWM, with 57.4% of significant suppliers included in these programs.
| Capacity building programs | FY 2022 | Target for FY 2023 |
|---|---|---|
| Number of suppliers in capacity building programs | 199 | 60%of significant suppliers |
| percentage of significant suppliers in capacity building programs | 57.4% | TBD |
