Supply Chain Sustainability Management

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Email: ESG@wistron.com

Supply Chain Sustainability Management

Supply Chain Sustainability Management

Supplier code of conduct


Wistron is fully aware that in the pursuit of the company's continuous growth, our operating strategy must take into account the impacts of society and the environment. Therefore, Wistron invites all our suppliers to work together towards sustainability and has established the supplier code of conduct, as a basis for supplier compliance. The content covers the 5 major aspects of labor, health and safety, the environment, code of ethics, and management systems. At the same time, we will include the suppliers’ compliance with the code as one of the assessment items during procurement. In order to improve the sustainability of supply chains, we have amended the Supplier Code of Conduct in 2021 and required suppliers to re-sign the Code of Conduct and undergo related education and training. The Code of Conduct signing rate and training rate were 87.20% and 81.91%, respectively.

Signing of the supplier code of conduct
2021
2022 Targets
Existing suppliers
  • The number of suppliers that should sign is 1,055
New suppliers
  • The number of suppliers that should sign is 117
New critical suppliers
  • The number of suppliers that should sign is 16
Existing suppliers
New suppliers
New critical suppliers
Existing signed Code of Conduct

87.20%

Training rate for the Supplier Code of Conduct

81.91%

SAQ response rate among tier 1 suppliers

100%

Wistron supplier code of conduct

Sustainability risk assessment for suppliers

In order to understand the risk related to sustainability in the supply chain, Wistron distributed the Self-Assessment Questionnaire (SAQ) to all our tier 1 suppliers and non-tier 1 suppliers. The suppliers must describe their implementation of the 5 major sustainability issues (sustainability and operational risk management, supply chain and operation continuation, environmental protection, human rights and labor security, and occupational safety and health) in the questionnaire, and provide related evidence, such as management system certification or related documents. The supplier self-assessment result will be used as reference for future sustainability risk management. The response rate for the SAQ among tier 1 suppliers was 100% in 2021. The response rate among critical non-tier 1 suppliers was also 100%.

2021 Self-Assessment Questionnaire
Supplier types 2021 2022 Targets
Tier 1 suppliers Number of surveyed suppliers 1,084 suppliers -
Response rate (%) 100% 100%
Critical tier 1 suppliers Number of surveyed suppliers 394 suppliers -
Response rate (%) 100% 100%
Critical non-tier 1 suppliers Number of surveyed suppliers 256 suppliers -
Response rate (%) 100% 100%

Through the analysis of the SAQ results, we defined suppliers which scored less than 80 points as high risk suppliers, and identified the potential risks within the supply chain. In 2021, we identified 50 high risk suppliers (including 14 critical suppliers). We later conducted onsite audits of the high risk suppliers, in order to confirm and understand the risks of the suppliers.

2021 high sustainability risk factors for suppliers
Dimension Risk
Environmental protection Energy conservation and carbon reduction mechanisms for energy management have not been implemented.
Scope 3 greenhouse gas emissions management has not been implemented.
Sustainability and operational risk management Response plan management for continued operations has not been implemented.
2021 Self-Assessment Questionnaire results
Tier 1 suppliers Critical tier 1 suppliers Critical non-tier 1 suppliers
Number of high risk suppliers 50 14 0
Number of high risk suppliers 4.61% 3.55% 0%

Supplier audit

In order to implement supplier sustainability risk management, Wistron has stipulated audit procedures for supplier CSR and onsite audits will be conducted for critical suppliers and high risk suppliers. If the supplier has a score of lower than 80 points in the audit results, the Company will ask the supplier to propose improvement measures for discrepancies found in the audit. The supplier is required to complete the improvements for the discrepancies, report back, and file a re-audit application within two months. If the supplier still can't pass the re-audit, it may not file another application within six months. Where the issues discovered affect the quality of materials supplied, the materials/supplier will be replaced with an alternative.

2021 2022 Targets
Number of audited critical suppliers 650 suppiers -
Number of audited high risk suppliers 50 suppiers -
Percentage of audited high risk suppliers (%) 100% 100%
Number of audited high risk critical suppliers 14 suppiers -
Percentage of audited high risk critical suppliers (%) 100% 100%
Deficiency improvement rate (%) 100% 100%

Deficiencies in the audit and the percentage of related ESG items


Critical suppliers (331 suppliers) and high risk suppliers (50 suppliers) were audited according to the audit procedures above. 45 non-compliant reports were found, including 16 cases of sustainability and operational risk management, 1 case of supply chain sustainability management, 21 cases of environmental protection, 3 cases of human rights and labor security, and 4 cases of occupational health and safety. The discrepancies found in the audit shall be improved with the stipulated improvement measures and continuous follow up, in order to ensure effective improvement actions and reduction of risk.

Supplier audit deficiency improvement actions

Aspects Topics Improvement Actions
Sustainability and operational risk management Anti-bribery and anti-corruption control procedures Information Security
  • Periodic education, training and advocacy are organized for employees and related stakeholders
  • To understand the possible outcomes and risks of violations.
  • For the identification of information security risks, education and training related to information technology management policies are implemented to improve overall IT security capabilities and strengthen the organization’s resilience against IT security incidents and threats.
Supply chain sustainability management Supply chain disruption
  • Establish a comprehensive supply chain risk management plan
  • Identify all risks at every point of the supply chain
  • Improve the accuracy of demand prediction and establish a secure inventory
Environmental protection Environmental permits
  • Formulate energy saving and carbon reduction policies and reduction targets. Promote the implementation of practical actions to regulate impact
Human rights and labor protection Anti-discrimination communication channel
  • Direct complaint channels through a suggestion box, public WeChat account, or QR code
  • Conduct anti-discrimination training for employees according to the training plan and implement record retention and management
Occupational safety and health Handling of work-related injuries/occupational illness Personal protection
  • Advocacy and announcement of the handling of work-related injuries/occupational illness. The added announcement areas include: Break area/employee cafeteria
  • Conduct inspection of chemical safety information
  • The designated personnel for first aid kits shall conduct the inspection to ensure that the protective equipment match the ones listed

Sustainable supply chain strategy


Wistron places great value on our partnerships and growth with our suppliers. We hope to use our partnerships to support each other and grow together. Our strategy is based on sustainable procurement. We have responded to customer demands and established the Sustainable Supply Chain Strategy, which includes, quality performance and implementation, technical manufacturing capabilities, cost/operation management, local supply chain prioritization, and sustainability. We hope to strengthen our partnerships to create new opportunities.

Wistron has established a global procurement unit and supplier quality management unit to conduct supplier management. The units manage the standards and procedures for supplier selection based on partnerships with suppliers. They conduct risk/performance evaluations, audit guidance, education and training, and organize supplier conferences, in order to implement the sustainability requirements in the daily management of supply chains.

Supplier sustainability evaluation


Wistron has stipulated ESG standards for suppliers (including new and existing suppliers). In order to become a Wistron supplier, suppliers must sign the Code of Conduct and are required to pass ISO 90001, ISO 14001, IECQ QC 080000, and ISO 45001 certification.

Furthermore, we have included the supplier’s ESG performance in the selection criteria. Regarding the evaluation of new suppliers, the product quality assurance evaluation form of partner suppliers will be used for evaluation. The ESG factors account for 13.33% of the score, and include:


  1. Established appropriate and effective documents and procedures related to the RBA Code of Conduct (2.22%)
  2. Complies with labor standards (2.22%)
  3. Complies with health and safety standards (2.22%)
  4. Complies with environmental standards (2.22%)
  5. Complies with ethical business standards (2.22%)
  6. Complies with management systems (2.22%)

The ESG performance of existing suppliers is regulated by the supplier performance evaluation. The regulated items include quality, reliability, compliance, supply capabilities, price, and sustainability. Among these factors, sustainability accounts for 10% and includes:

  1. Whether operational risk management and disaster prevention plans have been established (e.g. for human rights issues and management risks, etc.) (5%)
  2. Whether the supplier complies with the hazardous material regulations (5%)

Supplier selection mechanism


In order to implement sustainability and performance management for suppliers, Wistron has implemented the supplier performance evaluation system. The scores, from high to low, go from A to E (A is over 85 points and E is lower than 46 points). The evaluation is the basis for supplier selection and the selection mechanisms are as follows. In 2021, one supplier was rated as E in the supplier performance evaluation and no suppliers were eliminated.

  1. Suppliers who scored lower than an E in the quarterly evaluation are required to propose improvement measures. Wistron will discuss adjustments to the supplier’s strategy and the cancellation of the supplier’s current projects and qualifications for new projects according to the improvements implemented by the supplier.
  2. If a supplier is given an E rating for 3 consecutive quarters, the suspension of the supplier’s qualifications to join new projects will be discussed in the quarterly meetings.

Supplier partnership projects


Through communication and cooperation with the suppliers, Wistron continues to identify their needs while they improve on sustainability. We maximize the impacts of the investments and improve the sustainability awareness and capabilities of suppliers, in order to face the ever-changing sustainability standards and trends.

Supplier partnership projects Cooperation description Qualitative benefits Quantitative benefits
PCR(Post-consumer Recycled) Use of PCR (post-consumer recycled) plastics Monitor products use recycled plastics. The use of recycled plastics in products fully implements the ideas of a circular economy PCR renewable plastics are used in over 91.03% of monitors.
Hosting of the Supplier Conference Cooperated with SGS/Cozeta/National Taipei University of Science and Technology to promote GHG related activities Information related to supplier GHG inventory and Wistron’s requirements GHG inventory reports were provided by 350 suppliers (52 provided verification statements, 89 provided social responsibility reports, and 16 provided carbon disclosure project reports)
Introduced Xienbi (CNP) automated testing Automated testing of mechanism dimensions Parts coverage: Optimized measuring points and improve mass production efficiency Measuring points are reduced for the Cyborg series (4 points per side), increasing from 30% to 60%
Introducing water-based environmentally friendly paint The introduction of water-based paints complies with VOC requirements In response to the government’s call to action, Wistron complies with policy transformations and adjustments, adapts to environmental requirements, and completes our corporate vision according to customer needs, in order to gain customer recognition and improve competitiveness The action is equal to reducing VOC emissions by 2.028 tons/year, decreasing emissions by 66.29%
PCR renewable plastics are used in monitors

91.03%

Introduced water-based environmentally friendly paint reduces carbon emissions

66.29%

Supplier Conference


Every year, the Wistron team invites with suppliers to achieve friendly, mutually beneficial, and common growth for sustainability. In the 2022 Supplier Conference, the main focus will remain on global climate change. The Wistron Group Partner Conference is hosted to honor the suppliers with outstanding performance in sustainability, social responsibility, and greenhouse gas inventory reports. During the 2021 CSR/GHG Supplier Conference, consultant companies were invited to provide education and training to suppliers. In addition, we also explained Wistron's management policies for sustainability and social responsibility to suppliers, with the aim of promoting Scope 3 of the GHG inventory and the importance of water resource management.

Critical performance indicators for sustainable supply chains
2019
Achievement rate
2019
Target
2020
Achievement rate
2020
Target
2021
Achievement rate
2021
Target
2022
Target
2025
Target
2030
Target
Signing rate of the code of conduct for tier 1 suppliers 80.00% 80% 90.50% 82% 86.50% 90% 100% 100% 100%
Risk assessment completed for tier 1 suppliers 89.60% 90% 90.00% 100% 100% 100% 100% 100% 100%
Audit rate for high risk suppliers 67.10% 70% 100% 100% 100% 100% 100% 100% 100%
Suppliers signed the “Declaration of Non-use of Conflict Minerals” 90.00% 85% 89.80% 92% 86.26% 90% 100% 100% 100%
Number of attendees at the Supplier Conference - groups/departments - - 176 people/290 people - 354 people/366 people - 300 suppliers/210 suppliers 350 suppliers/250 suppliers 400 suppliers/300 suppliers
Suppliers with high energy consumption obtained external GHG inventory certification (ISO 14064-1) - - - - - - 35% 50% 100%