Supply Chain Management

Category

Description

Policy and Commitment

Nan Pao Supplier Code of Conduct

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

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.

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.

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.

Aspect

Description

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

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.

Category

Description

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.

Provision of ESG Benchmark Information

•       Regularly provide peer ESG benchmark information and external training so suppliers can compare their performance against peers.

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.