Supply Chain
Supplier Sustainability Management Policy
Nan Pao regards its suppliers as long-term partners. Competitive quality, technology, delivery, and cost are essential requirements for all suppliers. To achieve sustainable development within the supply chain, Nan Pao ensures that suppliers comply with social and ethical standards, understand and adhere to applicable laws, and proactively address environmental and social issues. Suppliers are expected to assume corporate social responsibility and continually improve and enhance their practices.
Given that Nan Pao Resins operates across Taiwan, Mainland China, and Vietnam, the procurement units take into account regional regulatory differences by establishing additional evaluation standards for different types of cases and incorporating corresponding clauses into contracts. This ensures that suppliers comply with both legal and corporate requirements, and the list of required signatories has been extended to cover the entire Nan Pao Group.
As of 2024, none of the suppliers at Nan Pao Resins’ major operating sites employed child labor or engaged in activities that caused significant or potential environmental impacts. The Group’s key suppliers’ manufacturing facilities were located in Asia (Japan, Korea, Mainland China, Vietnam) and in Europe and the United States (Germany, Belgium, the United States, Spain, and Italy), with no procurement activities involving high-risk regions.
Supplier Management
To achieve the goal of sustainable supply chain development, Nan Pao specifies environmental requirements in theNan Pao Supplier Code of Conduct, including compliance with environmental permits, resource conservation and pollution prevention, hazardous substance management, waste and emission control, and material management. Suppliers are required to comply with these requirements and provide signed confirmation. In 2024, the return rate of the signed Supplier Code of Conduct reached 96.3%.
Starting in 2024, the Taiwan headquarters has followed the Supplier Management and Evaluation Procedures under the ISO 9001 Quality Management System to guide supplier selection and management. In addition, Nan Pao has established the Supplier ESG Risk Assessment Criteria to evaluate key suppliers on sustainability risks across environmental, social, human rights, and corporate governance dimensions. Assessments are conducted through the Supplier ESG Risk Self-Assessment Questionnaire, and through ongoing communication and improvement actions, the Company works to advance sustainability throughout the supply chain.
Local Procurement
Nan Pao Group is committed to promoting a local procurement policy, actively fulfilling the Company’s responsibility to support local economies and communities. This initiative not only fosters local business development but also effectively reduces the environmental impact of transportation, thereby strengthening the Company’s long-term sustainability.
In Nan Pao’s products, raw material costs account for the largest portion of production costs, while raw material quality is a key factor influencing product yield. Therefore, ensuring a stable and high-quality supply of raw materials has always been our top procurement priority.
In 2024, the proportion of locally sourced raw materials at Nan Pao Taiwan reached 76.2%, a 4% increase compared to 2023, and has consistently remained above the 70% target. For procurement related to services, engineering, and equipment, the local sourcing ratio was 87.4% in 2024, slightly lower than 99.5% in 2023. This decline was mainly due to the advance purchase of equipment by Spark Foamtech Enterprise Co., Ltd., a newly established joint venture in Taiwan, which will be resold once its land and facilities are ready. Excluding this internal transaction, the local procurement ratio for services, engineering, and equipment still reached 99.1%, consistent with the previous year.
With production sites across multiple countries, Nan Pao Group will continue to deepen collaboration with local suppliers at each site, promoting local procurement strategies and contributing to the creation of a healthier and more resilient business environment.
Supplier ESG Program
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Category |
Description |
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Policy and Commitment |
Nan Pao Supplier Code of Conduct |
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Board Oversight |
• The "Nan Pao Supplier Code of Conduct" is approved by the Board representative and serves as the highest guiding principle. • The Board regularly reviews the ESG management plan to ensure that supplier partnerships align with the company's sustainability policies and objectives. • The Board is responsible for overseeing the implementation of the "Supplier ESG Management Plan." |
|
Code of Conduct Review |
• Suppliers must comply with the "Nan Pao Supplier Code of Conduct," which covers business ethics, labor rights, health and safety, environmental protection, and corporate governance. • Procurement practices are reviewed to ensure alignment with the Supplier Code of Conduct and to avoid conflicts with ESG requirements. • To assess supplier compliance with the Code of Conduct, we take the following measures: • Periodic reviews via signed compliance statements • Provide necessary guidance and support • Ensure alignment with management expectations and goals |
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ESG Rating and Contract Termination Clauses |
Evaluation of Key Suppliers' ESG Performance • We assess the ESG performance of key suppliers by reviewing their ESG reports or through the Supplier ESG Assessment Questionnaire, covering environmental, social, and corporate governance aspects. Contract Termination Clause • ESG-related termination clauses are included in supplier contracts. • If a supplier fails to meet required ESG performance standards or is involved in a major ESG incident, Nan Pao reserves the right to terminate the partnership. • A six-month improvement period is provided; if the supplier fails to improve within this timeframe, the contract will be terminated. |
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Supplier Selection |
• Ensure that suppliers partnering with Nan Pao demonstrate strong ESG performance and align with the company’s ESG vision and objectives. Suppliers with stronger ESG performance are preferred in supplier selection and contract awarding. |
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Procurement Staff Training |
Conduct annual ESG training for procurement staff and relevant internal stakeholders (via internal programs or in collaboration with external organizations) to ensure they understand their responsibilities in the supplier ESG program and how to effectively promote and manage it. |
Supplier Screening Mechanism
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Aspect |
Description |
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Business Relevance |
• Products or services required by Nan Pao • Approved suppliers that have passed Nan Pao's evaluation process |
|
Environment |
• Includes but is not limited to air pollution, wastewater, waste, hazardous chemicals management, energy use, and greenhouse gas emissions |
|
Social |
• Includes but is not limited to human rights and labor rights |
|
Corporate Governance |
• Includes but is not limited to anti-corruption and anti-bribery |
In 2024, there were 80 Tier-1 significant suppliers, accounting for 64.55% of total procurement, and there was 1 significant supplier outside Tier-1.
Supplier ESG Assessment
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Assessment Method |
Description |
|
Desktop Assessment |
• Suppliers representing the top 60% of transaction value are required to complete an ESG self-assessment questionnaire or provide the previous year's ESG report. • Nan Pao's internal team or external consultants will review supporting documents provided by suppliers to evaluate their commitments, implementation status, and potential risks related to ESG issues. • Questionnaire mapped to RBA SAQ domains (Labor, H&S, Environment, Ethics, Management Systems). |
|
On-Site Supplier Assessment |
• Nan Pao's internal team conducts on-site visits and evaluations of suppliers identified as high ESG risk. These assessments include onsite inspections, interviews, and verification of relevant information to evaluate ESG performance and risks. |
|
Supplier Corrective Action/Improvement Plan |
• Following desktop or on-site assessments, Nan Pao provides suppliers with improvement recommendations detailing gaps and actions, and offers guidance and technical support during implementation. |
In 2024, 58 significant suppliers underwent either document-based assessments or on-site audits, and no material deficiencies were identified.
Supplier Development
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Category |
Description |
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ESG Programs/Training |
• Provide suppliers with detailed information on ESG programs, including standard documents and ESG-related forms. • Regularly organize supplier education and training activities, as well as supplier partner forums, to facilitate information exchange and provide ESG initiative education. |
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Provision of ESG Benchmark Information |
• Regularly provide peer ESG benchmark information and external training so suppliers can compare their performance against peers. |
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Assistance with Improvement Measures |
• External consultants provide remote consultation/review of supplier improvement measures. • Internal staff provide feedback and relevant information on supplier improvement measures. |
|
Deep Support Program |
• Participate in the Ministry of Economic Affairs' "Low-Carbon Intelligent Manufacturing Upgrade Subsidy Program" to help selected suppliers enhance their carbon management and information disclosure capabilities. |
In 2024, 2 significant suppliers participated in capacity-building programs to enhance carbon management and disclosure capabilities.