Sustainable Supply Chain Management

Supplier Sustainability Management Approach

As part of the ASEH Procurement and Supply Chain Development Policy and Commitment, we established a four-stage sustainability supply management process that is run repeatedly to ensure supplier compliance and enhance their sustainability performance. In order to effectively improve the overall sustainability performance in the supply chain, we implement a series of supplier counseling and capacity building programs, and also established incentive and removal mechanism which related to supplier ESG performance. By incorporating ESG performance/regular evaluation system, we expect to create a positive sustainable supply chain management.

Supplier Sustainability Agreement and Evaluation

ASEH Supplier Code of Conduct and ASEH Sustainability Assessment Questionnaire (SAQ) establish standards based on the “Responsible Business Alliance. RBA” and refer to international principal including” OECD Guidelines for Multinational Enterprises, “UN Guiding Principles on Business and Human Rights”,” UN Universal Declaration of Human Right”, “ILO Declaration of Fundamental Principles and Rights at Work”, “ILO Fundamental Conventions”, and” Social Accountability SA8000”.

Supplier ESG Risk Screening

To better manage supplier risks, we established a 2-phase screening process that evaluates any underlying ESG risks at our suppliers. For suppliers that exhibit high levels of ESG risks, ASEH will closely monitor and supervise them through periodic audits and guidance to mitigate and control the risks effectively.

Phase I: Active Assessment – All suppliers

Base on type of business relation between ASEH and supplier, and the procurement value, we then assess the procurement category (eg. raw material, facility, equipment, contract services) and potential ESG risks.

Phase II: Sustainability Self-Assessment Questionnaire (SAQ) – Tier 1 suppliers

To cater for a diverse and complex supplier base, we have customized our SAQs according to the type of industry, and ESG risk assessments for different categories of suppliers.

Supplier Category and Sustainability Assessment Aspects

• Raw material supplier: Labor, Health and safety, Environmental protection, Sustainable governance, Risk management and Supply chain management
• Facility, Equipment and Waste management suppliers: Labor, Health and safety, Environmental protection, Ethics and Sustainable management system
• Service contractor: Labor, Health and safety, Ethics, Sustainable management system and Irregular audit

Supplier Assessment and Evaluation

Phase I: Desk Assessment – Tier 1 supplier

We’ve conducted sustainability assessment questionnaire to all tier-1 material suppliers. Suppliers are required to self-assess risk and provide corresponding supporting document in accordance with the requirements of the question.

Phase II: Physical Assessment – Significant supplier

We define significant suppliers by high-risk supplier that identified by SAQ survey result and its business closeness with ASEH. Then we conduct physical assessment and provide counselling to ensure supplier’s risk circumstance and continually reduce risk level.

Sustainability Assessment

For our key raw material and critical suppliers, we include ESG metrics on top of other indices such as quality, costs, delivery, service and technology, as performance measurements at quarterly business reviews (QBR). Suppliers with the best ESG performance are recognized at our annual supplier day, and invited to share their expertise in sustainability development with other suppliers at the annual supplier forum. Outstanding suppliers also receive priority in our procurement selection process.

Supplier Performance Improvement Program

ASEH has implemented on- site or remote support to help suppliers develop actionable plans on completion of correction and improvements within a specified timeframe. We will follow up with a second audit to track the progress of corrective actions and to determine all identified deficiencies have been effectively addressed and resolved. For suppliers who continue to fall short of compliance despite counselling, we will still offer guidance in the first year and potentially reduce our procurement volume with them. To maintain the company’s standard of service and quality, suppliers will be removed from our qualified supplier list if they fail to meet expectations in the second year, and all dealings with them will be suspended.