Issue Date：July 29, 2022
 

Suppliers are important partners for the sustainable operation of the Company and the plants in Taiwan and China. We have a total of 1,639 suppliers (1,422 domestic suppliers reaching 87% and 217 overseas suppliers). We conducted the classification and management based on the characteristics of the supplier and the products and services provided by them while adopting local procurement as the priority to promote the development of local economy. We also ensured to maintain stable operation, accelerated the production efficiency and reduced the carbon emission generated during the transportation as much as possible.
 

To achieve the vision of “for a sustainable future” with suppliers, we have established the “Sustainable Supply Chain Management Regulations” for suppliers of production materials, with contents including legal compliance for suppliers; risk assessment, audit, and training and guidance for suppliers; and commendation of suppliers with outstanding performance and sharing information on the trends of sustainable development at the supplier annual conference to ensure the sustainable development of suppliers. Additionally, we have also established the “RBA Code of Conduct Management Handbook” according to the Code of Conduct (CoC) published by the Responsible Business Alliance (RBA) for supplier management and urging suppliers to emphasize ethics, labor human rights, environmental protection, health and safety issues to thoroughly implement risk management and the business continuity plan (BCP) in order to build a sustainable supply chain.

Sustainable Suppliers Code of Conduct

   

 

Regulation

Compliance with "Supplier and Contractor Sustainability Commitment Statement"

• We established "Supplier and Contractor Sustainability Commitment Statement" based on RBA to require suppliers of production materials (except for OEM and customer-specified suppliers) to comly with all requirements of RBA Code of Conduct Version 7.0, Green Product Warranty (promise and ensure their products comply with the Code of Green Product Procurement, and provide RoHS lab test and examination report from an accredited third-party unit, Green product commitment, Environmentally hazardous substance questionnaire, Lead-free part reliability report, Safety data sheet (SDS), Certificate of authenticity (COA), Test integrated form, and Conflict Minerals Statement), Responsible Minerals Procurement Policy, Declaration on Non-Use of Conflict Mineral, Integrity Commitment and Environmental Sustainability and Occupational Safety and Health Policy.
• A total of 392 suppliers affixed their signatures with a signing rate of 80%

RBA VAP

Coretronic Optics (Suzhou) and Coretronic Projection (Kunshan) completed the RBA VAP, achieved Silver Status and respectively earned a score of 170 and 164.2.

Responsible Minerals Procurement Policy, Declaration, and Investigation

Conflict metal refers to minerals from the conflict mining area of the Democratic Republic of the Congo. These minerals are refined into tantalum (Ta), tin (Sn), tungsten (W) (referred to as tri-T mineral), gold (Au), and cobalt (Co), which are used in electronics and other products, respectively. Some of the metal minerals have become the main source of financial resources for armed rebel groups in the African Democratic Republic of the Congo. They are used to trade arms, carry out bloody conflicts with the government, and desecrate local civilians. As a result, international disputes have arisen. As a global citizen, we recognizes that the exploitation, trading, processing, and exporting of mineral resources in conflict-affected and high-risk areas have risks that may cause major adverse effects, and we recognize that we have respect for human rights, do not contribute to conflicts and are not environmentally friendly. And society has a negative impact. We declare and promise not to accept the use of metals from conflict mining areas. At the same time, we also require our suppliers to:

1. Must fulfill social environmental responsibility.
2. Ensure that products do not use “conflict minerals” from Democratic Republic of the Congo and its neighboring countries and regions.
3. Trace all sources of Au, Ta, Sn, W, and Co contained in all products.
4. Intolerance cannot be done in any way to benefit, encourage, assist or facilitate any party to commit serious human rights violations.
5. It will not tolerate any direct or indirect support from organized armed groups that have been mined, transported, traded, processed or exported through mineral resources.
6. Do not provide, promise, give or demand any bribe and resist bribery or extortion. It will not cover up or falsify the origin of mineral resources, and falsely report the taxes and expenses that mineral resources exploitation, trade, processing, transportation, export and other activities Bribery with royalties will pay to the government.
7. Do not participate or benefit from mining resources on land that does not receive free, prior, informed consent from local and indigenous peoples, including those with legal title, lease, and concession or permitted.
8. This requirement is communicated to its upstream supplier.

We established and added “Responsible Minerals Procurement Policy” and “Declaration on Non-Use of Conflict Mineral” based on RBA to “Supplier and Contractor Sustainability Commitment Statement” as well as announced the requirements above to all suppliers at annual supplier conference. All suppliers of production materials must sign and comply with “Supplier and Contractor Sustainability Commitment Statement.”

Moreover, in order to meet customers’ needs, our Visual Solutions Business Group uses ”Conflict Minerals Survey Form” based on CFSI CMRT Version 6.1 to investigate the information of smelters for the Tantalum, Tin, Tungsten and Gold required in the products. In 2021, we have successfully received responses from 208 suppliers, with the response rate of 100%.

Risk Evaluation

• RBA self-assessment questionnaire: In order to thoroughly evaluate the sustainability risks of our production material suppliers, we send RBA self-assessment questionnaires to all suppliers who are subject to RBA audits, so that the suppliers can first assess their own sustainability performance and then conduct written/on-site RBA audits after the self-assessment questionnaires are completed.
• ESG self-assessment questionnaire: To understand more about the ESG development of suppliers to facilitate guiding them to the sustainable supply chain, in 2021 we completed the sustainability survey questionnaire and planned to upload it to the Green Product Management System (GPMS) by 2025 for suppliers to answer it online, so that we can identify their awareness of sustainable management and level of management in order to plan suitable improvement actions for suppliers.
• Strategic materials preparation system : Prioritize controls over materials with higher risk in supply and key materials, set the strategic safety stock based on the market supply-demand condition and supplier delivery speed to ensure stable materials supply and effectively lower the operational risk caused by materials supply. In the future, we will continue to search for and cultivate local suppliers that meet the green and environmental protection regulations and provide quality materials in order to prioritize local procurement and reduce carbon emissions by shortening the transportation mileage.
• Annual financial risk assessment of suppliers: In 2020 the financial unit began to perform the annual financial risk assessment of suppliers each year with the list of suppliers with potential risk approved by the supervisors of business groups provided by the procurement unit. Based on the open financial data and financial statements provided by suppliers and the reports obtained from third-party credit investigation companies (such as the credit investigation companies working with D&B), the financial unit grades the risk level of suppliers and submit the results to the CFO for approval. Then, the procurement unit delists suppliers with higher risk. In 2021 we assessed the financial risk on 8 suppliers and removed 2 with higher risk from the quality vendor list.
   

  Target	Strategy	Performance
  Prevented supply disruption Improved supply performance and responsiveness Strengthened the labor flexibility and agility of employees	【Visual Solutions Business Group】 In response to the COVID-19 pandemic, we searched for the production and supply solutions across Taiwan, Hong Kong, and China by sourcing the same material from different suppliers and maintaining a safety stock for 2-4 weeks to ensure the steady operations of Kunshan Plants.   Based on the government policy, we surveyed the employee duty status, PCR test status, logistics status, stock status, financial status, and availability of epidemic control supplies of suppliers in mainland China; adopted different counteractions to the different policies in different areas; and coordinated resource dispatch as necessary to ensure the normal production of all products and timely delivery of products to customers.	All suppliers maintained normal production. Order fill rate (OFR): 100% Materials preparation rate: 100% Kunshan Plants maintained normal operations and remained unaffected.
  	【Energy-saving Business Group】 Implemented regional supply chain and multiple source procurement strategy. Ensured the supply capability of suppliers through periodic evaluation. Built the remote supply system operation mechanism .	Implemented the supplier verification for homogeneous sources Completed the annual evaluation and audit of all suppliers Completed the remote operation drill of purchasing personnel

Education and Training

We build the professional on-line green platform and hold the supplier conference to assist suppliers to solve problems.

 

Since the promotion of the supply chain responsibility for the electronics industry in 2017, Coretronic worked together with the suppliers to improve aspects of quality, cost, delivery time, environmental protection, safety and health. By the on-site guidance and face-to-face communication, we improved the supply chain management capability to fulfill the sustainability commitment at the same time. In 2021 plants in Taiwan and Wujiang Plants held the Sustainable Supply Chain Online Conference with 112 suppliers to exchange opinions regarding sustainable development trends, directions and future planning for supply chain management, climate change mitigation for business operations, net zero targets, HSF & UL management. In the future, we will continue to grow with suppliers to develop better supply chain partnership. We also urge suppliers to emphasize climate change issues and take more eco-friendly actions to foster a sustainable supply chain together.

　 　 　 　 　 　 　 　 　 　 　 　 　 　

Location	Taiwan	China
Session	1	1
Total number of participants	34	78
Main issues	ESG Lecture 1 – ESG Themes and Trends ESG Lecture 2 – Sustainable Environment Best Supplier of the Year Award – “Golden Award” and “Sustainable Development Award” Panel Discussion	ESG Lecture – ESG Trends and Sustainable Environment   HSF & UL management Best Supplier of the Year Award – “Golden Award” and “Sustainable Development Award” Panel Discussion

Best Supplier of the Year Award

To commend outstanding suppliers, both plants in Taiwan and Wujiang Plants presented the “Golden Award” and “Sustainable Development Award” to outstanding suppliers of the year at the annual supplier conference. The “Golden Award” was awarded to suppliers with outstanding performance in delivery time, cooperation, and product quality. The “Sustainable Development Award” was awarded to suppliers with specific performance in carbon reduction by recovering packaging materials and repeating container uses during the transactions. Wujiang Plans t even invited outstanding suppliers to share their achievements in energy conservation and carbon reduction, hoping to encourage more suppliers to join sustainable development.

• Wujiang Plants have been inviting suppliers to join in energy conservation and carbon reduction since 2019, and the number of participating suppliers increased to 15 in 2021. 5 of them had participated for 3 consecutive years
• In addition to inviting top-performing suppliers to share their experiences in the implementation of energy conservation, we also share with each other about the impact of the COVID-19 pandemic and ways to strengthen sustainable supply chain management, so that we can jointly improve our ability to respond to supply chain crises and adapt to climate change.
• In the future, we will continue to hold supplier sustainability exchange meetings to raise suppliers' awareness of environmental protection and energy conservation, and facilitate the development of more green solutions to create a sustainable supply chain.

Supplier Circular Economy Collaboration

We have implemented a waste recycling plan together with the supplies since 2017 to recycle plastic and paper wrappings. In addition, packaging materials that could be used to carry materials repeatedly were used for shipment and recovered after use to reduce consumption of wrappings and containers, promote the idea of circular economy such as recycling and reduction of waste, and act in a more environment-friendly manner. A total of 8 suppliers supported the idea with a recycle rate of 96% in 2021.

CDP Supply Chain Engagement

In the 2021 CDP supplier engagement rating report, Coretronic received the rating of Management B, exceeding the average of global enterprises (B-Level). Coretronic is committed to supplier partnership, and actively conducts value chain partnerships engagement for climate change mitigation and adaptation. The rating items of “Supplier engagement” and “Scope 3 emissions” were rated A. In the future, we will continue to actively work with suppliers to improve operation resilience and performance.