Supply Chain Management Framework

• Completed carbon inventories for 137 suppliers
• Conducted on-site carbon emission audits of 12 suppliers
• Achieve a 20% reduction in suppliers carbon emissions by 2030

Sustainable supply chain management measures

Taiwan Mobile has built a sustainable supply chain management system through innovative activities, integrated three aspects of environment, society and governance (ESG), systematically managed suppliers, and established seven management priorities:

1. Quality management: Confirm that products and equipment meet the sustainable demand through the technical appraisal mechanism, and grasp the actual implementation status of each supplier through the supplier's performance, and make optimization and improvement.
2. Service management: Suppliers are required to commit to completing a service and providing a delivery date. Suppliers that delay will be disqualified from consideration.
3. Risks: Suppliers are required to sign the "Declaration of Integrity in Business Conduct", and not to violate the Labor Standards Act and other laws and regulations related to fair competition, environmental protection, and copyrights. Use the annual ESG review to confirm the implementation status of business conduct integrity, conduct risk assessment, and identify the ESG risk and impact degree of suppliers as the basis for supplier selection.
4. Opportunities identification: Find the suppliers who have consistently performed well in the industry according to ESG issues, identify the possible opportunities of each supplier for future cooperation, and conduct effective management and cooperation.
5. Sustainability implementation: Improve the information security capability and transparency system of the supply chain, and strengthen the responsibility for the supply chain by effectively managing the supplier management practices. Organize regular education and training for employees and suppliers, so as to enhance both sides' awareness of sustainability.
6. Low-carbon procurement transportation: TWM considers both transportation costs and carbon emissions from logistics and transportation services in its supply and transportation route planning. We hope to strike a balance between transportation costs and carbon emissions by optimizing existing logistics routes and making logistics routes greener to reduce their environmental impact.
7. Sustainable implementation of green procurement: TWM sets corresponding environmental standards for different procurement items, and tries to increase purchases of products and services that meet or surpass those standards, thereby reducing the impact of procurement goods on the environment.

Implementation through five major processes:

Classified management of suppliers	According to the procurement type, amount and key conditions, the suppliers are classified into six categories. In each category, the suppliers are classified into critical suppliers and general suppliers for differentiated management to ensure the appropriateness and effectiveness of the management resources.
Selection of new suppliers	New vendors are required to pass corporate governance review, sign Declaration of Integrity Operation, pass credit financial review and on-site audit, and fill in Self-Evaluation form in ESG Performance for new suppliers. Suppliers will be qualified suppliers of the Company in the future after the suppliers implement sustainable management. Suppliers must sign the Declaration Letter for Environmental and Occupational Health and Safety Policy for Contractors when undertaking orders.
Supplier maintenance	Suppliers need to fill out the CSR self-assessment form for review to help TWM identify the risks of individual vendors and the overall supply chain sustainability, keep abreast the current status of supply chain sustainability management, and further propose differentiated improvement plans to track the improvement results of partner vendors every year. TWM started conducting a carbon inventory review in 2019 to further understand carbon emissions of the supply chain, which is used for reference when formulating the supply chain carbon reduction system.
Threshold for major tenders	TWM has officially listed the quantitative ESG score as the supplier’s major bidding threshold since 2019. The Company hopes to enhance management measures of suppliers through procurement, as well as encouraging suppliers to be proactive through the requirements of sustainable performance evaluation in response to TWM's sustainable actions. Both new and existing suppliers must reach a certain sustainable performance threshold before they can participate in TWM's major bids.
Training programs	1. Procurement personnel training program: regular education and training on the internal procurement personnel is conducted to ensure the awareness and familiarity of sustainable supply chain management. 2. Cooperative supplier education and training: organize supplier sustainability education and training, and hold annual supplier conference to praise and share high-performance suppliers.

Supply Chain Carbon Management

TWM starts to train suppliers on greenhouse gas and carbon management issues from 2018, continues to coach partners on taking comprehensive inventories of greenhouse gas emission sources and improving the quality of the inventory data, while also deepening their awareness of the impact of carbon emissions from the supply chain. In 2021, TWM completed 2020 carbon emissions inventories for 137 critical Tier-1 suppliers and on-site audits of 12 suppliers.

The 2020 inventory result is the base year for TWM to set its greenhouse gas reduction plan. The major supply chain emissions of TWM are transportation logistics and information service suppliers. The main negotiation suppliers are identified according to their emissions, and reduction targets and suggested strategies will be designed for each supplier's industrial category to jointly promote suppliers' carbon reduction, so as to achieve the 20% reduction target of supply chain carbon emissions in 2030.

Top 10 Key Suppliers	Suppliers with the Top 10 Emissions in 2020 Require or help reduction target setting Design reduction path and action plan, and track the reduction performance every year
Top 30 Important Negotiation Suppliers	Suppliers with the Top 30 Emissions in 2020 Require the establishment of reduction targets Propose the reduction action plan and track the reduction performance every year.