Sustainability

Supplier Management

 

 

We value our relationship with suppliers for offering quality products and services to consumers. Chunghwa Telecom’s suppliers can be divided into three categories: material, labor and engineering. We make enormous purchases from an extensive number of suppliers, from networking equipment, data equipment, cables, marketing design, to waste disposal services.

This means that we possess great influence to convince suppliers into supporting our social responsibilities. Chunghwa Telecom utilizes four approaches, namely: contractual terms, questionnaire surveys, Supplier CSR Interchange Meeting, and on-site audits, to raise suppliers’ awareness and understanding towards CSR, as well as the commitments we have made in supply chain management. For suppliers that have just begun to familiarize with the CSR concept, we choose to encourage their participation while at the same time provide them with the proper education and assistance; over time, we hope to engage all suppliers in a win-win relationship.

Supplier Code of Conduct

 “Code of Corporate Social Responsibility for Suppliers of Chunghwa Telecom Co., Ltd.” clearly outlines the Company’s expectations in terms of "Business, Ethics, Labor, Environment, Safety and Health.”

The guidelines apply to all suppliers that provide products or services to Chunghwa Telecom or its subsidiaries or joint ventures, and extends to other participants of the supply chain that the supplier is directly or indirectly related to. We hope that suppliers may commit to our values and take more proactive steps toward maintaining a sustainable business relationship. Please refer to Code of Corporate Social Responsibility for Suppliers of Chunghwa Telecom.pdf

Supply Chain Spend Analysis 

Each year, Chunghwa Telecom conducts supplier-oriented expenditure analysis, for those procurements’ amount over NT$100,000 in total annually. Analysis criteria include: procurement type, regions and top 10 major procurement categories. Procurements are then processed and bottom prices are assigned. With the continuous development of business, our annual purchase amount has also continued to increase, reaching NTD 61.85 billion in 2017, and the 2018 is expected to maintain the same amount. 98.32% of total procurements are subjected to expenditure analyses. Among them:

•  72.08% are material suppliers, 11.38% are labor suppliers and 16.54% are engineering suppliers.

  Domestic procurements account for 56% of total procurements, and will continue to grow gradually in the future.

Please refer to Supply Chain Analysis of Chunghwa Telecom.pdf

Critical Suppliers

According to the “Procurement Management Regulations”, volume of procurement over NTD $50 million is a major procurement case that need to be proposed to and evaluated by the Head Office. CHT defines suppliers for major procurement volume over 50 million as our critical suppliers. We’ve further modified the definition of critical supplier from “suppliers with single supply procurement valued over 50 million” to “suppliers with annual supply procurements cumulatively valued over 50 million” in 2017. As a result, there were 174 critical suppliers in 2017, including 146 critical tier 1 suppliers and 28 critical non-tier 1 suppliers.

Supply Chain Management Strategy

The top 5 priorities of CHT’s supply chain management strategy are as follows:

(1) Compliance performance: especially with laws and regulations regarding labor, environment, safety and health legislations, as well as “Social Responsibility Principles for Suppliers” & Execution of “Principles of Corporate Social Responsibility for Suppliers of Chunghwa Telecom.” Other compliances include performance records, experience, performance, user evaluations, schedule compliance efficiency, compliance cost control records, labor employment relationships or human-caused accidents.

(2) Technology: such as functionality of technical specifications, professional or technical manpower, professional expertise, capability of timely contract performance, technical feasibility, equipment resources, training capability, maintenance capability, construction methods, economy, standardization, degree of slimness, requirements on operational environment, degree of environmental protection, etc. 

(3) Functions and quality: such as production capacity, handiness, versatility, expandability, compatibility, adaptability, quality control capability, inspection and testing methods, error detection rate, ease of operation and maintenance, precision, safety, stability, reliability, comfort of use, failure rate, sturdiness, durability, service life, etc.

(4) Management: such as organizational structure, workforce qualifications and composition, work interface handling, schedule management, site management, safety and health management, security maintenance, accounting system, financial condition, project management capability, subcontracting plan, etc.

(5) Commercial terms: such as contract period, term of payment, supplier’s remittance promise to entity, maintenance service schedule, after sale service, warranty period, document preparation, etc.; We also consider price and other matters related to the function or benefit of the procurement.

ESG Integration

Chunghwa Telecom realizes the influence of major enterprise on suppliers, and we think it’s also important to let our suppliers understand how they can change the world step by step, that's one of our supply chain strategy: to lead our suppliers and even the industry to grow. Labor and EHS management standard is another important factor of our supply chain strategy, since we think not only Chunghwa Telecom but also our suppliers should treat employees in a good way, and provide them a safe and well working environment. Employee is a key point for sustainable development as you may find this spirit in “Code of CSR for Suppliers of Chunghwa Telecom.”

Environmental and energy efficiency considerations account for 5% of supplier evaluation Suppliers of Chunghwa Telecom shall abide by relevant environmental legislations and regulatory principles of local governments (including but not limited to waste renewal and disposal, carbon emissions, noise, etc.) during business operation and provision of products and services, as well as actively adopt concrete actions to avoid any tangible pollution, while also formulate and implement improvement plans and policies capable of improving environmental performance. Chunghwa Telecom will award positive recognition for suppliers with established environmental management systems and competent track records in relevant planning, operations, controls, and recordings.

Supplier CSR Status Survey and Audit

Engineering suppliers and suppliers with high sustainable risk would be the top priority for us to audit. In 2017 audits were conducted on 75 route-engineering suppliers, total 173 times, and 10 suppliers were conducted “third-party audit”. Management and employees were interviewed to monitor production quality through onsite audits (announced and unannounced). From 2012, suppliers with procurement of NT$ 5 million or more must agree to abide by the “Chunghwa Telecom Supplier CSR Guidelines” and “Directions for the Promotion of the Suppliers’ CSR Implementation,” and implement supplier CSR surveys to facilitate our supervision of the sustainability risks of suppliers. Our definition of high sustainability risk is as follows:

● Economic: Occurrence of business ethics violations due to supplier not having formulated a code of conduct or not complying with relevant regulations.

● Environmental: Supplier has yet to formulate a written environmental policy and has not formally requested that suppliers comply with environmental regulations.

● Social: Company has yet to formulate a written labor policy or health safety policy or has not complied with social regulations.

According to our preliminary supplier sustainability assessment plan, suppliers in the equipment and labor category will also be gradually included in the scope of audits to further integrate ESG (environment, social, governance) factors and supplier selection criteria.

Creating Win-Win Cooperative Relationships

Over the years, we have continued to jointly growth with our suppliers. We provide incentives for them to work in research and development. Rights to our patented technologies are transferred fairly. In terms of hardware and software, we continue to support telecommunications facilities and testing environments. We provide expansion and open cooperative platforms to achieve profit sharing. We also share resources with suppliers to enhance their R&D capabilities. To mastering future technologies, we also committed to the advance of a friendly environment.

KPIs and Targets

KPI

TARGET

Completion of tier-1 suppliers’ CSR status assessment by 2020.

100% of CHT’s tier 1 suppliers shall receive the assessment in the form of a hardcopy checklist by 2020. The list, which will be attached to the actual contract, will assess the current condition of the companies on ethic, health, environment, safety and labor as well as their CSR initiatives. All of the suppliers need to fill out the finish the self-assessment checklist to complete the procurement. CHT will further review and analyze the suppliers’ CSR status based on the information gathered. Corrective action plans will be sent when risks are identified.

Completion of the critical tier-1 suppliers’ CSR on-site visit and audit by 2020.

Since 2014, 10 critical tier1 suppliers have been chosen to undergo “Supplier CSR Second Party Audit” every year. It is expected that 100% of the critical tier 1 suppliers will be audited in 2020. The audit program covers the company's:

1. Code of Conduct or Labor, Ethics, Environment, Safety and Health Policies

2. Training materials and records for Code of Conduct or Labor, Ethics, Environment, Health and Safety Policies

3. Procedures of Privacy: protection for suppliers, customers, consumers and employees

4.Prohibition of the use of child labor

5. Safety and Health Management: certificates and Policies, processes and requirements of environmental

protection, pollution prevention and resource reduction.

Completion of carbon management education and training for critical tier-1 supplier and gathering climate change and carbon emission data from the said suppliers at least once a year by 2020.

At the end of 2017, Chunghwa Telecom joined the Carbon Disclosure Project “CDP Supply Chain Project” and formally launched supply chain carbon management plan, becoming the first telecom industry and the second domestic company to join the international platform. We aim to conduct trainings program of CDP questionnaire related topics for 100% of our critical tier 1 suppliers. In order to help them with a better understanding of how CDP relates to their specific organization, how it applies to daily business scenarios and how it can help with strategic planning. In addition, we ask our suppliers to submit climate change and carbon emission data of their companies at least once a year.

 2017 Sustainable Environmental Visit

Chunghwa Telecom organized annual Sustainable Environmental Visit, during which a group of 53 representatives from 39 businesses were led by Vice President Ming-Fang Li of the Supply Department to a visit at Dihua Sewage Treatment Plan. Courses were designed and arranged to raise awareness of sustainability towards the environment. 

 

Download:

Code of Corporate Social Responsibility for Suppliers, Code of Corporate Social Responsibility for Suppliers of Chunghwa Telecom.pdf

Directions for the Promotion of the Suppliers’ CSR Implementation, Directions for the Promotion of the Suppliers’ CSR Implementation.pdf

Supply Chain Spend Analysis, Supply Chain Spend Analysis of Chunghwa Telecom.pdf

 

 

We value our relationship with suppliers for offering quality products and services to consumers. Chunghwa Telecom’s suppliers can be divided into three categories: material, labor and engineering. We make enormous purchases from an extensive number of suppliers, from networking equipment, data equipment, cables, marketing design, to waste disposal services.

This means that we possess great influence to convince suppliers into supporting our social responsibilities. Chunghwa Telecom utilizes four approaches, namely: contractual terms, questionnaire surveys, Supplier CSR Interchange Meeting, and on-site audits, to raise suppliers’ awareness and understanding towards CSR, as well as the commitments we have made in supply chain management. For suppliers that have just begun to familiarize with the CSR concept, we choose to encourage their participation while at the same time provide them with the proper education and assistance; over time, we hope to engage all suppliers in a win-win relationship.

Supplier Code of Conduct

 “Code of Corporate Social Responsibility for Suppliers of Chunghwa Telecom Co., Ltd.” clearly outlines the Company’s expectations in terms of "Business, Ethics, Labor, Environment, Safety and Health.”

The guidelines apply to all suppliers that provide products or services to Chunghwa Telecom or its subsidiaries or joint ventures, and extends to other participants of the supply chain that the supplier is directly or indirectly related to. We hope that suppliers may commit to our values and take more proactive steps toward maintaining a sustainable business relationship. Please refer to Code of Corporate Social Responsibility for Suppliers of Chunghwa Telecom.pdf

Supply Chain Spend Analysis 

Each year, Chunghwa Telecom conducts supplier-oriented expenditure analysis, for those procurements’ amount over NT$100,000 in total annually. Analysis criteria include: procurement type, regions and top 10 major procurement categories. Procurements are then processed and bottom prices are assigned. With the continuous development of business, our annual purchase amount has also continued to increase, reaching NTD 61.85 billion in 2017, and the 2018 is expected to maintain the same amount. 98.32% of total procurements are subjected to expenditure analyses. Among them:

•  72.08% are material suppliers, 11.38% are labor suppliers and 16.54% are engineering suppliers.

  Domestic procurements account for 56% of total procurements, and will continue to grow gradually in the future.

Please refer to Supply Chain Analysis of Chunghwa Telecom.pdf

Critical Suppliers

According to the “Procurement Management Regulations”, volume of procurement over NTD $50 million is a major procurement case that need to be proposed to and evaluated by the Head Office. CHT defines suppliers for major procurement volume over 50 million as our critical suppliers. We’ve further modified the definition of critical supplier from “suppliers with single supply procurement valued over 50 million” to “suppliers with annual supply procurements cumulatively valued over 50 million” in 2017. As a result, there were 174 critical suppliers in 2017, including 146 critical tier 1 suppliers and 28 critical non-tier 1 suppliers.

Supply Chain Management Strategy

The top 5 priorities of CHT’s supply chain management strategy are as follows:

(1) Compliance performance: especially with laws and regulations regarding labor, environment, safety and health legislations, as well as “Social Responsibility Principles for Suppliers” & Execution of “Principles of Corporate Social Responsibility for Suppliers of Chunghwa Telecom.” Other compliances include performance records, experience, performance, user evaluations, schedule compliance efficiency, compliance cost control records, labor employment relationships or human-caused accidents.

(2) Technology: such as functionality of technical specifications, professional or technical manpower, professional expertise, capability of timely contract performance, technical feasibility, equipment resources, training capability, maintenance capability, construction methods, economy, standardization, degree of slimness, requirements on operational environment, degree of environmental protection, etc. 

(3) Functions and quality: such as production capacity, handiness, versatility, expandability, compatibility, adaptability, quality control capability, inspection and testing methods, error detection rate, ease of operation and maintenance, precision, safety, stability, reliability, comfort of use, failure rate, sturdiness, durability, service life, etc.

(4) Management: such as organizational structure, workforce qualifications and composition, work interface handling, schedule management, site management, safety and health management, security maintenance, accounting system, financial condition, project management capability, subcontracting plan, etc.

(5) Commercial terms: such as contract period, term of payment, supplier’s remittance promise to entity, maintenance service schedule, after sale service, warranty period, document preparation, etc.; We also consider price and other matters related to the function or benefit of the procurement.

ESG Integration

Chunghwa Telecom realizes the influence of major enterprise on suppliers, and we think it’s also important to let our suppliers understand how they can change the world step by step, that's one of our supply chain strategy: to lead our suppliers and even the industry to grow. Labor and EHS management standard is another important factor of our supply chain strategy, since we think not only Chunghwa Telecom but also our suppliers should treat employees in a good way, and provide them a safe and well working environment. Employee is a key point for sustainable development as you may find this spirit in “Code of CSR for Suppliers of Chunghwa Telecom.”

Environmental and energy efficiency considerations account for 5% of supplier evaluation Suppliers of Chunghwa Telecom shall abide by relevant environmental legislations and regulatory principles of local governments (including but not limited to waste renewal and disposal, carbon emissions, noise, etc.) during business operation and provision of products and services, as well as actively adopt concrete actions to avoid any tangible pollution, while also formulate and implement improvement plans and policies capable of improving environmental performance. Chunghwa Telecom will award positive recognition for suppliers with established environmental management systems and competent track records in relevant planning, operations, controls, and recordings.

Supplier CSR Status Survey and Audit

Engineering suppliers and suppliers with high sustainable risk would be the top priority for us to audit. In 2017 audits were conducted on 75 route-engineering suppliers, total 173 times, and 10 suppliers were conducted “third-party audit”. Management and employees were interviewed to monitor production quality through onsite audits (announced and unannounced). From 2012, suppliers with procurement of NT$ 5 million or more must agree to abide by the “Chunghwa Telecom Supplier CSR Guidelines” and “Directions for the Promotion of the Suppliers’ CSR Implementation,” and implement supplier CSR surveys to facilitate our supervision of the sustainability risks of suppliers. Our definition of high sustainability risk is as follows:

● Economic: Occurrence of business ethics violations due to supplier not having formulated a code of conduct or not complying with relevant regulations.

● Environmental: Supplier has yet to formulate a written environmental policy and has not formally requested that suppliers comply with environmental regulations.

● Social: Company has yet to formulate a written labor policy or health safety policy or has not complied with social regulations.

According to our preliminary supplier sustainability assessment plan, suppliers in the equipment and labor category will also be gradually included in the scope of audits to further integrate ESG (environment, social, governance) factors and supplier selection criteria.

Creating Win-Win Cooperative Relationships

Over the years, we have continued to jointly growth with our suppliers. We provide incentives for them to work in research and development. Rights to our patented technologies are transferred fairly. In terms of hardware and software, we continue to support telecommunications facilities and testing environments. We provide expansion and open cooperative platforms to achieve profit sharing. We also share resources with suppliers to enhance their R&D capabilities. To mastering future technologies, we also committed to the advance of a friendly environment.

KPIs and Targets

KPI

TARGET

Completion of tier-1 suppliers’ CSR status assessment by 2020.

100% of CHT’s tier 1 suppliers shall receive the assessment in the form of a hardcopy checklist by 2020. The list, which will be attached to the actual contract, will assess the current condition of the companies on ethic, health, environment, safety and labor as well as their CSR initiatives. All of the suppliers need to fill out the finish the self-assessment checklist to complete the procurement. CHT will further review and analyze the suppliers’ CSR status based on the information gathered. Corrective action plans will be sent when risks are identified.

Completion of the critical tier-1 suppliers’ CSR on-site visit and audit by 2020.

Since 2014, 10 critical tier1 suppliers have been chosen to undergo “Supplier CSR Second Party Audit” every year. It is expected that 100% of the critical tier 1 suppliers will be audited in 2020. The audit program covers the company's:

1. Code of Conduct or Labor, Ethics, Environment, Safety and Health Policies

2. Training materials and records for Code of Conduct or Labor, Ethics, Environment, Health and Safety Policies

3. Procedures of Privacy: protection for suppliers, customers, consumers and employees

4.Prohibition of the use of child labor

5. Safety and Health Management: certificates and Policies, processes and requirements of environmental

protection, pollution prevention and resource reduction.

Completion of carbon management education and training for critical tier-1 supplier and gathering climate change and carbon emission data from the said suppliers at least once a year by 2020.

At the end of 2017, Chunghwa Telecom joined the Carbon Disclosure Project “CDP Supply Chain Project” and formally launched supply chain carbon management plan, becoming the first telecom industry and the second domestic company to join the international platform. We aim to conduct trainings program of CDP questionnaire related topics for 100% of our critical tier 1 suppliers. In order to help them with a better understanding of how CDP relates to their specific organization, how it applies to daily business scenarios and how it can help with strategic planning. In addition, we ask our suppliers to submit climate change and carbon emission data of their companies at least once a year.

 2017 Sustainable Environmental Visit

Chunghwa Telecom organized annual Sustainable Environmental Visit, during which a group of 53 representatives from 39 businesses were led by Vice President Ming-Fang Li of the Supply Department to a visit at Dihua Sewage Treatment Plan. Courses were designed and arranged to raise awareness of sustainability towards the environment. 

 

Download:

Code of Corporate Social Responsibility for Suppliers, Code of Corporate Social Responsibility for Suppliers of Chunghwa Telecom.pdf

Directions for the Promotion of the Suppliers’ CSR Implementation, Directions for the Promotion of the Suppliers’ CSR Implementation.pdf

Supply Chain Spend Analysis, Supply Chain Spend Analysis of Chunghwa Telecom.pdf