Supply Chain Management Framework and Supplier ESG Program

Negotiated with 1 supplier (Tatung System Technologies Inc.) to develop a carbon reduction plan with reference to SBTi pathway and announce their carbon reduction target
Successfully negotiated the inclusion of SBTi Net-zero Commitment in the contract with 1 supplier
Completed carbon desk assessment for 116 suppliers and on-site carbon assessment for 10 suppliers
Compared to the baseline year of 2022, the goal is to achieve a 23% reduction in supply chain carbon emissions by 2035

In 2023, Taiwan Mobile revised its Supplier Code of Conduct, incorporating requirements for human rights, labor rights, environmental standards, and business ethics, as well as expectations for supply chain partners. In the same year, Taiwan Mobile adopted the ISO 20400 Sustainable Procurement Framework and enhanced supplier ESG performance through on-site audits, supplemented by education and training. This initiative aims to prompt suppliers to align with sustainable strategies and proactively identify and manage potential sustainability risks within the supply chain. Therefore, the Company has a mechanism for regularly reviewing procurement behavior to ensure compliance with the Supplier Code of Conduct.

Sustainable Supply Chain Management System

Taiwan Mobile established the Sustainable Development Department in 2019 to plan and carry out ESG strategies and projects. The Supplier ESG Program is integrated into the company's overall ESG policy planning and oversight of the program is conducted by the board of directors. The Company continues to build a sustainable supply chain management system through innovative initiatives. In 2023, it introduced the ISO 20400 framework for sustainable procurement and supplier management into its existing Procurement Management Regulations, which was approved by the General Manager. Therefore, the procurement policies, systems and all management processes cover sustainability factors including environmental, social, governance and business relevance. We conducted the suppliers screening through the above four sustainability factors. The supply chain management system is applicable for new suppliers, existing suppliers, and major tenders. It also ensures compliance with the Supplier Code of Conduct through risk assessment. The regulations includes seven key management focuses as follows:

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.
Service management: Suppliers are required to commit to completing a service and providing a delivery date. Suppliers that delay will be disqualified from consideration.
Risk management: Suppliers must sign the "Declaration of Integrity in Business Conduct" and cannot violate fair competition, environmental protection, copyrights, and labor laws and regulations. We will use the annual ESG review to confirm the implementation status of business conduct integrity and conduct risk assessments. The results will serve as the foundation for supplier selection.
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.
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.
Low-carbon transportation: Incorporate transportation costs and carbon emissions from logistics traffic into the planning of supply transportation routes and green the current logistics flow.
Continuation of green procurement implementation: Taiwan Mobile plans to adopt the ISO 20400 Sustainable Procurement Guidelines for procurement management in 2023 and set corresponding environmental standards for different procurement items to reduce the environmental and social impacts generated by procuremen tactivities.

Implementation through five major processes

Supply Chain Carbon Management

Since 2018, Taiwan Mobile has been conducting greenhouse gas inventories for its suppliers, continuously improving the quality of inventory data, and establishing carbon-related sustainability awareness among suppliers.

In 2023, Taiwan Mobile completed the 2022 carbon emissions inventory for 116 tier-1 suppliers and conducted on-site assessments of 10 suppliers. The Company continued to hold Precision Carbon Reduction Workshop in 2023, teaching 10 key suppliers with high carbon reduction potential to set their own carbon reduction targets based on the SBT scientific carbon reduction pathways. During the workshop, Taiwan Mobile also invited 1 supplier to share an industry carbon reduction case. Through two-way communication, Taiwan Mobile deepened supplier engagement. Using 2020 as the baseline year for setting the greenhouse gas reduction plan, the goal is to align with the 2035 Zetta Connected 2.0, achieving a 23% reduction in supply chain carbon emissions by 2035.

The carbon emission hotspots in Taiwan Mobile's supply chain are transportation and logistics, and information service providers. The primary engagement targets are identified based on the top 90% of emissions and procurement amounts. In 2023, one supplier has already responded to the carbon reduction plan. Taiwan Mobile collaborated with Tatung System Technologies Inc., assisting in developing a carbon reduction plan following the SBTi methodology. Additionally, Taiwan Mobile successfully negotiated with one supplier to include SBT commitments in the contract, continually expanding the scale of carbon reduction within the supply chain.

Internal Training (for company’s buyers and/or internal stakeholders)

Taiwan Mobile offers many internal ESG-related courses, such as TCFD, CDP, SBTi Carbon Reduction Pathways, Circular Economy, ESG Disclosure, etc., and requires relevant buyers and internal stakeholders to participate, with a requirement of 50 hours of courses annually. Additionally, starting from 2016, the performance and compensation of the General Managers and Deputy General Managers are linked to ESG performance. Irregular education and training workshops are held to explain key ESG strategies including the Supplier ESG Program to TWM employees ranging from senior executives to entry level employees, encouraging all employees to practice and implement the company's sustainability vision.

In 2023, TWM continued to hold Supplier Conferences and Carbon Reduction Symposium Workshop for suppliers. In addition to inviting suppliers to participate, responsible buyers were also required to attend, providing guidance, and exchanging views with suppliers.