Corporate Sustainability

Sustainable Supplier Management

SPIL attaches great importance to supplier sustainability management. We conduct management of raw material suppliers' regular costs and quality and perform evaluations and audits while offering guidance and education and training to strengthen the suppliers' operational capabilities. We implement supplier sustainability management upon the introduction of new suppliers. We verify each supplier's basic financial position, quality management, environmental management, and other relevant system certifications through supplier questionnaires while requiring them to sign the conflict minerals declaration and the RBA declaration. The declarations contain the requirements for non-use of conflict minerals and the compliance with the requirements in the aspects of labor, health and safety, environment, business ethics and management systems while specifying that suppliers shall also need to conduct factory evaluations upon the introduction of new raw material suppliers related to substrates, lead frames, target materials, chemicals, etc., to ensure that the suppliers can meet SPIL's relevant regulations. The scope of factory evaluation includes quality management, system management, sustainability risk, and the control of environment-related substances. After the factory evaluation is completed and countersigned and approved by SPIL's procurement, quality assurance, engineering, and relevant units, suppliers will become qualified suppliers. In 2023, SPIL conducted a factory evaluation of 2 new raw materials supplier as per the regulations. It has passed the evaluation and become qualified suppliers of SPIL.

SPIL safeguards labor, environment, and ethics in line with the RBA spirit. We attach greater importance to suppliers' sustainable operation capabilities. Through sustainable supplier management, we ensure the safety of the work environment in the supply chain, implement environmental protection, and ensure that the employees are respected and dignified and business ethics are observed. We communicate with suppliers about ESG requirements and future goals, and we strengthen supply chain management to reduce supplier sustainability risks. In addition, we have built suppliers' awareness of sustainable management to comply with changes in environmental regulations and customers' environmental requirements. SPIL conducts supplier sustainability risk surveys and high-risk supplier audit management. Further, we send RBA self-assessment questionnaires to our key material suppliers for surveys. In addition, we continue to require suppliers to join the RBA online platform to facilitate supplier sustainability management. Moreover, we require suppliers to keep abreast of their greenhouse gas emissions and motivate them to conduct ISO 14064-1 greenhouse gas emission verification in response to the impact and risks arising from global climate change.

Supplier Code of Conduct

SPIL and its subsidiaries promoted the realization of corporate social responsibility, and in order to ensure business integrity, corporate governance, and concern for employee, green enterprise and social participation. Also, SPIL introduced RBA(Responsible Business Alliance) to be the standard for internal management. Therefore, this Supplier Code of Conduct (hereinafter referred to as "the Code") is based on the basis for compliance and we require Suppliers’ business conduct to strictly comply with this Code.

The Code is made up of five sections. It outline standards for Labor, Health and Safety, the Sustainable Environment, and business ethics respectively. And also outline the elements of an acceptable system to manage conformity to this Code.

Supplier Code of Conduct

Supplier performance management

Suppliers are our important resources and partners, and the stability of the supplier's supply capacity is closely related to its sustainable operation capabilities. We ensure their sustainable operating capabilities through supplier performance management. Upon the introduction of new suppliers, we conduct a preliminary review of suppliers' basic business capabilities by requiring them to fill out a questionnaire. We list them as qualified suppliers with the approval of the relevant units. Afterwards, suppliers who have started to collaborate with SPIL will have their management performance guided, assessed, and audited. Those with excellent performance will be encouraged, whereas those with inadequate performance will be guided to make an improvement. For those who still fail to meet our requirements, we will replace them timely to maintain the competitiveness of our overall supply chain. In addition to basic quality, technical support, cost, delivery timeline/service, and other items related to delivery, we included the spirit of sustainability in the key points for management. We adopt RBA’s risk investigation and assessment to inspect high-risk suppliers and conduct on-site audits to comprehensively manage suppliers, thereby improving the sustainable performance of the supply chain.

1. Suppliers Evaluation

We rate major raw material suppliers every month by evaluating their delivery quality, cost, delivery time, and technical performance. We hold an internal meeting quarterly to select critical suppliers while inviting relevant units and suppliers to review the performance at review meetings. The evaluation results are adopted to confirm suppliers' actual supply capacity. For suppliers with poor or unstable performance, we will help them improve immediately and prevent recurrence. The results will serve as a reference for subsequent transactions and enable suppliers to understand their performance in relation to their competitors to maintain their advantages and to improve their disadvantages, thereby maintaining their own competitiveness. We will also express our recognition of suppliers with excellent performance by increasing the number of our orders or praising them publicly.

2. Supplier audit

To ensure the effectiveness and actual implementation performance of the supplier quality and management system, SPIL select a number of suppliers based on their importance and rating results to carry out factory audit.

SPIL has, in 2017, launched the Responsible Business Alliance (RBA) audit. With an objective of exceeding regulatory requirements, the Company has designed an evaluation standard based on labor, health and safety, environment, management system and business ethics (integrity). It is expected that the suppliers will be able to autonomously and sustainably make improvement based on these five aspects; and be liable for their corporate social responsibility.

Conflict Minerals Management

Since 2013, we have conducted an annual survey of the sources of 3TG smelters. Our conflict minerals status within the scope of our control and management has been "DRC Conflict Free" since 2015. In 2023, we conducted conflict mineral investigations of 104 suppliers and planned to complete the independent third-party audit of conflict minerals by March 2024. Based on the management process above, we reasonably predict that the minerals used by SPIL in 2023 would be non-conflict minerals.

In addition to 3TG, we also initiate to conduct source investigations of cobalt and mica smelters on our suppliers and provide EMRT information to our customers for reference.

Conflict Mineral Policy

SPIL is dedicated to the elimination of these conflict minerals in our supply chain and to using only responsibly sourced "conflict-free minerals". We expect our suppliers to source conflict-free minerals from smelters or refineries that have been certified by an independent third party audit program to fulfill our objective. All suppliers to SPIL must support this policy by:
(a) Being diligent in their assessment and validation of their supply chains to ensure SPIL's objectives of a transparent supply chain and conflict-free purchases are inputs to the services and products we produce.
(b) Be in compliance at all times with all regional and international regulations for conflict minerals. 
(c) Be in compliance at all times with industry standards for the sourcing and reporting of conflict minerals. 
(d) Being diligent and accurate in their formal assurances of conflict-free minerals provided to us. 

For complete information, please see: Conflict Mineral Policy

Supply Chain Risk Management

To continuously enhance our performance in sustainable management and enhance our performance in supply chain sustainability, SPIL will establish an even more completesustainability risk evaluation and audit system . We will, based on the procurementcategory, procurement amount, suppliers' grade and suppliers' natures, set different levelsof risk control standards and requirements therefor in order to practically and efficientlyreduce sustainability risks.