Value Chain Management
Supplier Sustainability Management
Supplier management is not only about quality, delivery, cost, and service but also about environmental friendliness, social responsibility and sustainable governance. The Company therefore holistically reviews suppliers' ESG aspects and works with them to implement ESG sustainability programs.
The USI ESG Program for suppliers is implemented and monitored by the Sustainability Committee's Value Chain Management Taskforce, and the results of related plans are submitted to the Board of Directors annually for review. Each year, through Sustainability Risk assessment and conflict minerals due diligence, written assessments and on-site audits or visits, we identify suppliers, evaluate their environmental impact, social responsibility and governance practices, and plan corrective measures for sustainability to ensure that suppliers continue to comply with our "Supplier Code of Conduct".
In addition to the supplier assessment process, in 2022 we trained 100% of our internal procurement staff and other employees in sustainability knowledge and awareness, with a total of 5,821 employees participating 854 hours in the training sessions, to ensure that they understand the Company's supplier ESG program and instill ESG principles and knowledge into each employee's role and implement their daily operations.
Developing Sustainability Competency:
Course | SDG Sustainability Trends | RBA Code of Conduct | Conflict Minerals Management | Supplier RBA SAQ Introduction |
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No. of Employees | 4,950 | 766 | 62 | 43 |
Total Training Hours | 495 | 306 | 31 | 22 |
In order to properly grasp the sustainability risk status of suppliers, suppliers are required to sign a commitment to comply with the Code of Conduct. Suppliers are required to complete an annual Supplier Sustainability Assessment Questionnaire (SSAQ) covering the five major components of labor rights, health and safety, environmental protection, sustainability and risk management, and supply chain management, to ensure that their risks can be effectively controlled and reduced and conduct on-site audits of suppliers that may have higher risks to gain a deeper understanding of the current status of supplier sustainability development, implement effective supplier management, reduce risks and improve the overall efficiency of the supply chain, and strengthen the sustainable development of the supply chain.
Sustainability Risk Assessment Process:
Before conducting risk assessment of suppliers, USI must first proactively conduct supplier screening. The company selects suppliers to be included in control by annual procurement amount and identifies suppliers with potentially high risks in terms of governance, environment and social as the basis for key management.
Supplier Screening:
Methodology for Suppliers Screening | |||
We proactively review and investigate all suppliers' countries/regions, their production processes, and their respective product categories to conduct preliminary assessments of suppliers and analyze potential risks.
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Aspects of Suppliers Screening | |||
Environmental | Social | Governance | Business Relevance |
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USI follows the RBA Code of Conduct framework and conducts desk assessments and on-site audits of suppliers through the SSAQ. In 2022, the SSAQ had a response rate of 73%, and the assessment response rate over the years is shown in the table below. For identified audit findings, suppliers were required to propose improvement plans and complete them within deadlines, 100% of the suppliers completed their improvements, and we did not terminate any partnerships with suppliers.
Supplier Sustainability Risk Assessment:
Year | Unit | 2019 | 2020 | 2021 | 2022 |
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Number of suppliers evaluated with sustainability metrics | - | 515 | 576 | 419 | 525 |
Percentage of suppliers that completed Supplier Sustainability Assessment Questionnaire
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% | 70 | 70 | 73 | 73 |
Number of suppliers and contractors on-site audited with sustainability metrics | - | 80 | 76 | 83 | 81 |
We analyzed the deficiency items in supplier audits and found that of the five major areas, 42% were health and safety. The detailed results are shown in the chart below. USI will continue to assist suppliers with the goal of complying with the RBA Code of Conduct and contribute to the improvement and enhancement of the supply chain business environment together with suppliers.
Distribution of Supplier Sustainability Audit Findings:
USI conducts supplier human rights risk assessments to understand the importance of human rights issues in the supply chain. The results of suppliers found that "Freely Chosen Employment, Non-Discrimination/Non-Harassment, Occupational Safety, and Industrial Hygiene" were the main human rights risk issues. We identify suppliers that were likely to face high risks and take corresponding measures to continuously track the effectiveness of their different risk profiles and ensuing improvement plans.
Supplier Human Rights Incident Mitigation and Compensation Measures:
- Mitigation Measure
- Annual audits or RBA VAP to assess suppliers’human rights risks through each Facilities to mitigate risks.
- Requiring suppliers to adopt corrective measures for human rights risks and conduct follow-up on implementation.
- Instilling the importance of human rights in supplier labor through education and training on sustainable supply chains to reduce risks in advance.
- Compensation Measure
- Requiring suppliers to provide guidance or compensation, or to implement policy changes or other measures for employees whose human rights have been violated.
- If a high-risk vendor is identified, the Company shall conduct on-site audits and provide recommendations for improvement and require the vendor to submit improvement reports on a regular basis to track the performance of continuous improvement.
USI considers suppliers as key partners and attaches great importance to communication and interaction with them. Through supplier education and training, presentations, and technical/competency counseling, USI empowers suppliers to develop an awareness of sustainability management to meet the ever-changing trends and enhance the overall sustainability of the supply chain.
- Sustainable Supply Chain Training
- New Technology/Product Presentation for Suppliers
- Supporting Suppliers with Improvement Actions
- Supplier Carbon Mentoring Program