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Supply chain sustainable management

Sustainable
Supply
Chain
Management
Supply chain management
In addition to consistently requiring suppliers to provide high-quality raw materials and efficient services, CGPC also actively establishes diverse communication channels with its suppliers to strengthen two-way exchange and collaboration, aiming to jointly achieve sustainable development goals such as environmental protection, occupational safety, and human rights. Furthermore, the company has formulated a "Supplier Corporate Social Responsibility Commitment" as a foundation for promoting a sustainable supply chain. The implementation status and future plans are as follows:
Supplier management development track
Foundation
Establish a procurement unit, and consolidate the information that each subsidiary of the Group needs to purchase,purchase in bulks to achieve the goal of reducing costs.
System
Compliance with regulations
Establish procurement guidelines
Now
Establish supplier sustainability management culture
Increase risk assessment
Incorporate sustainability indicators into supplier evaluation
Promote signing of supplier/contract letter of commitment to social responsibility and onsite audit
Promote green procurement
Disclose sustainable supply management results and future plans
Introduce the Supplier Sustainability Self-Assessment Form, Code of Conduct, and Quality
Requirements Self-Assessment Form
Future Plan
Increase the number of supplier factory audits and reinforce work injury investigations
Suppliers jointly participate in social activities
Supply chain sustainable development
As one of the domestic benchmark companies, CGPC works together with suppliers to jointly undertake corporate social responsibility and formulate a letter of commitment for supplier CSR, the implementation status, and future planning:
Policy Commitment
Improve the safety environment for workers and strive to protect the environment.
Fulfill social responsibility and improve competitiveness.
Enhance partnership and share sustainable business opportunities.
Establish a supplier management mechanism to improve risk control and management capabilities.
Strategy
Enhance procurement performance, establish strong partnerships.
Foster a culture of safety awareness, creating a collaborative work environment.
Sharing the corporate social responsibility.
  • Short-term
    Short-term: 2024-2025
    •
    in 2024, all supplier signing of the “Supplier Social Responsibility Commitment” to achieve 100%
    •
    Collaborate with R & D on three annual projects, subject to market conditions:
    1. Development of recycled plastics, 2. Biodegradable, 3. Low-carbon and recyclable raw materials.
    •
    The “Supplier Code of Conduct and Quality Requirements Self-Assessment Form” is used to systematically assess the potential environmental and social risks of negative impacts caused by suppliers.
  • Medium term
    Medium term: 2026-2027
    •
    On-site audits will be conducted on 12 suppliers annually, and the development of incorporating sustainability self-assessment forms for field audits will be undertaken.
    •
    Encourage suppliers to jointly participate in social activities at least once/year.
  • Long-term
    Long-term: 2028-2032
    •
    Based on the results of factory audits, establish a communication platform with suppliers, for the deficiencies, we assign the relevant professionals to provide suggestions and assist in planning.
Supplier and contractor managment
To strengthen a sustainable supply chain system, CGPC promotes the following management strategies from multiple perspectives, working with its supply partners to achieve environmental protection, occupational health and safety, and social responsibility goals：
Deepening Partnership Cooperation - Growing Together
We promote an on-site supplier assessment system, conduct joint cross-departmental factory audits, and improve supply quality and service efficiency through document review and defect feedback.
Institutionalized management and evaluation mechanism
Establish a review and evaluation system for new suppliers and contractors to ensure that raw materials and engineering services comply with the company's environmental protection and safety standards.
Prioritize local procurement
We give priority to local suppliers in Taiwan, taking into account communication efficiency, delivery stability and local economic support.
Promote green procurement programs
Actively purchase government-certified green products. The green procurement amount in 2024 reached 98.64 million yuan, an increase of 27.19 million yuan over the previous year, demonstrating the effectiveness of green procurement.
Supplier Social Responsibility Commitment
We has reached an agreement with all suppliers/contractors to sign and comply with social responsibility commitments, promote on-site audits, and encourage suppliers to participate in social activities.
Promotion of Supplier Code of Conduct (Supplier Social Responsibility Commitment)
As a leading domestic enterprise, CGPC has a responsibility to encourage its suppliers to shoulder their social responsibilities. Therefore, we have drafted a Supplier Corporate Social Responsibility Commitment (hereinafter referred to as the Commitment), requiring suppliers to make commitments regarding human rights, workplace safety, health, environmental protection, and conflict minerals. The implementation status is as follows:

※ Request items
Labor and human rights
This includes no forced labor, prohibiting child labor, providing proper wages and benefits, guaranteeing workers' working hours and rest time, eliminating workplace sexual harassment, bullying and workplace discrimination, and not using conflict minerals.
Health and safety
Including the provision of necessary measures such as occupational safety, emergency response, industrial hygiene, machine protection, public health, food and accommodation, and health and safety information.
Environment
Includes environmental operating permits, pollution prevention and resource conservation, hazardous substances, sewage, non-hazardous solid waste, noise, exhaust emissions, product and service restrictions, energy/resource consumption and greenhouse gas emissions.
Ethics
This includes operating with integrity, respecting intellectual property rights, complying with relevant confidentiality agreements, protecting privacy, and avoiding conflicts of interest.
Supplier potential risk prevention and impact response measures
Proactive measures：
Procurement personnel receive training on supply chain sustainability and environmental, safety, and hygiene for contractors. To ensure worker safety, the company proactively inspects equipment and parts regularly or irregularly, based on their importance and safety. Through a maintenance management database, effective inventory, inspection, and replacement are conducted. The Group Procurement Department identifies qualified suppliers based on procurement requests from various units, the project value, contract value, or project importance. To align with international standards, we prioritizes sustainable procurement management, promotes green procurement, reduces environmental impact, and implements factory audits, integrating the results into a risk assessment mechanism.
Passive measures：
For broad-scale suppliers, the Transparent Footprint website is checked regularly to understand whether the suppliers have major violations and to assess whether their influence will cause potential impact on CGPC. The supply ratio, replacement and deployment of suppliers are adjusted. For engineering projects, the industrial safety unit will immediately conduct investigations on personnel safety, equipment damage and environmental impact, and the results will be handed over to relevant departments for improvement.
Supply chain risk assessment
CGPC has established an electronic procurement process platform. Based on the basic principles of fairness, impartiality, and openness, any behaviors of fraud and favoritism have been eliminated. We have established smooth communication channels with suppliers to avoid risks, and evaluate, prevent, and respond to sustainable supply chain risks. The execution plan for growth with suppliers is as follows：
  • Risk assessment and prevention
    In addition to the supply chain security requirements, the special conditions for chemical suppliers are identified as follows:
    Chemical process leakage and pollution risks.
    The risks of occupational safety and environmental pollution in workplaces with high dust, high temperature, high noise, or high humidity.
    Risk of working at heights.
    Industrial safety risks such as cutting or welding (S)
    VOC (volatile organic compounds) escape risk.
    Labor-intensive industries.
    Supply chain and engineering disruption/delayed delivery and completion risk.
    Raw material and process quality risk.
    Preventive approach
    Implement supplier sustainable self-assessment questionnaire for initial risk identification information.
    Establish long-term collaborative relationships with suppliers, develop new suppliers, and coordinate long- term material preparation systems.
    Establish an internal safety stock system and reference point for requisition according to the delivery schedule to prevent the risk of materials outage.
    Procurement personnel undergo education and training on supply chain sustainability.
    Environmental safety and health education and training for contractors.
  • Response to impact
    Adjust the supply proportion of suppliers and take alternative suppliers or have them complement one another.
    In terms of the engineering part, the environmental safety and health unit immediately starts an investigation on personnel safety, equipment damage and environmental impact, summarizes the results and submits such to the relevant units to take response measures, as well as understand the status.
  • Future plan
    Chemical suppliers are listed as key points, and aspects such as the procurement amount, tender amount for construction and the importance are included in the factory audit of the abovementioned SDGs, and establish risk assessment measures according to the results.
    Place it under restriction, and provide consultation according to the risk assessment measures and the risk levels after assessment.
The Company has established a grievance mechanism which can accept complaints through writing, communication channels with stakeholders, or through the mailbox of the Audit Committee. After receiving a grievance case and depending on the severity of the case, the Company will designate relevant personnel to investigate and notify the parties concerned and relevant personnel to attend on-site explanation, handling the case in a fair and reasonable manner.
Supply chain ESG risk management
Risk items and attributes Suppliers (Chemicals) Construction contractor
Environmental (E)、Social (S)、Governance (G)
Potential risk a.Chemical manufacturing process(E)
b.
High-dust, high-temperature, high-noise or high-humidity workplace(E)
c.VOC (volatile organic compounds) escape risk (E)
d.Labor-intensive industries (S)
e.Supply chain disruption/delay risk(G)
f.Quality risk(G)
a.
High-dust, high-temperature, high-noise or high-humidity workplace (E)
b.Risk of working at heights. (E、S)
c.Labor-intensive(S)
d.Industrial safety risks such as cutting or welding(S)
e.Construction disruption/delay risk(G)
f.Construction quality risk (G)
Number of audits and homevisits 4 companies (Audit) To be conducted together with the contractors' project construction assessment.
Audit details Environmental aspect (E) :
Whether or not the manufacturing and storage of environmentally controlled substances are conducted in accordance with the laws and regulations.
Governance (G)：
Quality, production and order management, customer complaints and satisfaction follow-up, employee education and training, and external processing management.
Number of qualified households 4 companies (100% qualified rate)
Supply chain management mechanism
Work environment safety for workers: CGPC has passed the requirements of ISO 45001 Occupational Safety and Health Management System. For the safety of contract workers in factory areas, the Company has established construction operation safety regulations and supervises them according to the strictest standards to effectively manage the safety of various operations. The Company eliminates or reduces the risk of accidents, and treats the safety and health of all workers in the factory with the strictest attitude.
Support local procurement
CGPC prioritizes supporting the local suppliers in Taiwan. This is due to that it is easier to communicate with local vendors to know their status. Purchasing from foreign vendors is considered only when the materials cannot be supplied locally. In 2024, the raw materials Vinyl Chloride Monomer (VCM) of CGPC and CGPCP are supplied by TVCM, and the purchase amount accounted for approximately 41.14% and 95.88%, respectively, of the total local source. The source of the raw materials ethylene and dichloroethane of TVCM is downstream products of the oil industry. Due to the limited supply in Taiwan and cost considerations, it must be imported to maintain the stability of the supply chain.
Green procurement program
CGPC began to actively implement the green procurement program in 2019, and has planned to cooperate with the Taipei City Government to carry out an online green procurement declaration project, mainly purchasing green machinery and equipment. The amount of government-approved green products purchased was NT$98.64 million in 2024, a increase of NT$27.19 million compared to last year as shown in the table below. We will continue to purchase green products in the future.
Green Procurement Statistics
(Unit: in NT$10 thousand)
  • Year
  • 2022
  • 2023
  • 2024
  • CGPC
  • 7,731
  • 4,852
  • 7,537
  • TVCM
  • 1,163
  • 1,391
  • 2,091
  • CGPCP
  • -
  • 902
  • 236
  • Total
  • 8,894
  • 7,145
  • 9,864
Note：
The data of self-assessment is from before 2022 for TVCM and CGPCP, and began to be applied for green procurement operations in 2023.
CGPC and TVCM received certificates of appreciation from outstanding companies for “2024 Green Procurement" and “2024 Net Zero Green Living."
Supplier management and evaluation
In response to changes in production operations and environmental protection policies, CGPC regularly evaluates the inclusion of new suppliers based on items such as service, quality certification, packaging quality, environmental protection, industrial safety, and delivery deadlines to ensure that every raw material and service obtained are of sufficient quantity, high quality, low price, while meeting the requirements of environmental protection, as well as industrial safety and policies and regulations.
♦︎ Supplier management：
1

Develop suppliers
Vendors' sample testing and qualification review
2

Qualification certification
Documentation of qualified suppliers "Group's Supplier Application Form/Qualified Vendor Application Form"
3

Continuous evaluation

Annual supplier evaluation process "Supplier Evaluation Form"


♦︎ Supplier evaluation：
Evaluation results of CGPC's qualified raw material suppliers and qualified material suppliers in the last 3 years
By company Raw materials and Materials Item 2022 2023 2024
CGPC Raw materials Number of companies evaluated 158 132 161
Qualified rate 100% 100% 100%
Materials Number of companies evaluated 27 49 52
Qualified rate 96% 100% 98%
Descriptions (1 unqualified)
Due to poor material quality and lack of positive handling attitude,
suggestions for improvement were made until the improvement and confirmation were completed. 		(1 unqualified)
Due to communication issues between the supplier and the plant regarding order delays, product returns and exchanges, and partial deliveries.
CGPCP Raw materials Number of companies evaluated 12 12 11
Qualified rate 100% 100% 100%
Materials Number of companies evaluated 9 19 16
Qualified rate 100% 100% 100%
TVCM Raw materials Number of companies evaluated 14 17 15
Qualified rate 100% 100% 100%
*
Evaluated once a year with a score of 75 or above is considered qualified.
*
Because TVCM does not have packaging materials or supplies, it is not included as part of the supplier evaluation.
Evaluation items for qualified raw material suppliers
Selection and evaluation of contractors
The procurement unit mails the Construction Contractor Survey Form to selected contractors and asks them to fill out the form, apply company seal stamps on the form then send it back. Survey forms with incomplete submission of supporting documents will not be evaluated and such contractors will not be allowed to undertake the Company's projects.
Project construction evaluation
Project construction evaluation items
Evaluation results of CGPC's project contractors (qualifying score of 70 and above) in the last 3 years
By company Item 2022 2023 2024
CGPC Number of companies evaluated 31 47 55
Qualified rate 100% 100% 100%
CGPCP Number of companies evaluated 4 8 6
Qualified rate 100% 100% 100%
TVCM Number of companies evaluated 12 24 11
Qualified rate 100% 100% 100%
If the score is less than or equal to 69 points, it is considered unqualified. If the rating is C (69-60 points) or D (50-59 points), the request for quotation will be stopped for 6 months or 1 year, respectively. Those with a rating of E (below 49 points) will be disqualified from bidding and there will be no transactions in the future.
In the process of construction evaluation, the supervisory unit and the environmental safety and health unit record the deficiencies in the construction process, and the contract offering unit will summarize and discuss with the project contractors, informing them of the scoring results and the deficiencies, and asking them to improve.
Implementation status of supplier social responsibility commitment
1.
Existing Suppliers : All suppliers with transaction records within one year have signed the Supplier Social Responsibility Commitment, with a 100% achievement rate. This has been incorporated into the internal operating procedure standard and is required to be signed by new suppliers.
2.
New Suppliers : Starting in 2019, we will begin promoting the establishment of internal operating procedure standards. New suppliers will be required to sign a letter of commitment and submit it along with their supplier information.
3.
Plant Audits : By 2024, we will complete factory audits of four suppliers, and the number is expected to increase to 12 by 2026. We will also include the supplier code of conduct and quality requirement self-assessment form in the plant audit program.
4.
The aforementioned Supplier Code of Conduct and Quality Requirements Self-Assessment Form covers five major aspects :labor and human rights, health and safety, environment and resources, ethics, and management and quality systems.
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