Supplier Screening, Assessment and Development
Chunghwa Telecom is the first telecom operator in Taiwan to promote sustainable supply chain management. Chunghwa Telecom has established a systematic management mechanism encompassing supplier screening, assessment, and development. In the supplier screening stage, in addition to conventional factors such as quality, price, and service, the Company refers to the Responsible Business Alliance (RBA) Code of Conduct and comprehensively considers business relevance as well as environmental, social, governance, country-specific, sector-specific, and commodity-specific risks to identify and classify qualified suppliers. For significant suppliers, Chunghwa Telecom utilizes desk assessments, on-site assessments by company employees, and on-site audits conducted by commissioned third-party verification bodies to capture suppliers’ ESG risks and implementation status. In the event of substantial actual or potential negative impact issues, suppliers are required to submit improvement plans and are subject to follow-up tracking. Meanwhile, through the Supplier Sustainability Partner Rating System, the Chunghwa Telecom Supplier Net-Zero Sustainability Academy, ESG education and training, environmental education, and decarbonization workshops, Chunghwa Telecom continuously empowers suppliers to enhance sustainability management capabilities.
The Company manages suppliers by tiers based on their degree of impact on operations and ESG risks and implements differentiated management measures for different supplier types. General suppliers primarily undergo desk assessments and ESG self-assessments. Significant suppliers further undergo on-site visits, on-site audits conducted by commissioned third-party verification bodies, and improvement tracking mechanisms. For significant non-Tier-1 suppliers, Chunghwa Telecom gradually enhances their ESG management capabilities through supply chain engagement and information disclosure mechanisms.
Aspects and Risks Considered in Supplier Screening
| Aspect/Risk | Description |
|---|---|
| Business Relevance Principle | Considerations include suppliers with annual transaction amounts reaching a specific scale, supply stability, irreplaceable products or services, critical products or services, critical parts or component supply capabilities, or significant impact on Chunghwa Telecom's operations. |
| Environmental (E) Principle | Aspects include, but are not limited to, greenhouse gases, energy, water resources, waste, pollution prevention and control, hazardous substance management, and resource efficiency. |
| Social (S) Principle | Aspects include, but are not limited to, human rights protection, labor conditions, forced labor, occupational health and safety, and grievance mechanisms. |
| Governance (G) Principle | Aspects include, but are not limited to, legal compliance, ethical corporate management, anti-corruption, information disclosure, information security, and data protection. |
| Country-specific Risk | Based on the OECD country risk classification scale and considering local political, legal, and other regional risks, Chunghwa Telecom assesses transaction risks with enterprises in specific locations and manages business dealings with those in high-risk countries. |
| Sector-specific Risk | Based on procurement categories and sector attributes, Chunghwa Telecom identifies suppliers prone to sector-specific risks such as energy or resource intensity, pollution potential, industrial safety risks, or labor risks, and enhances its management accordingly. |
| Commodity-specific Risk | Based on the supply chain structure of commodities and services, Chunghwa Telecom identifies potential negative risks of suppliers and their products. These include, but are not limited to, risks related to key raw materials, responsible minerals (including conflict minerals), forced labor, information security, data protection, and the supply of critical parts and components. |
Supplier Tiering Overview
| Category | Description | Number of Unique Suppliers | Share in Total Procurement Amount (%) |
|---|---|---|---|
| Number of unique suppliers |
|
2,694 | 99.87 |
| Number of unique significant suppliers |
|
230 | 89.39 |
Notes:
- Each supplier is counted only once in the total number of unique suppliers.
- Tier-1 supplier: An enterprise that directly provides products or services to Chunghwa Telecom with a procurement amount exceeding NT$150,000.
- Significant non-Tier-1 supplier: A significant supplier that provides products and services to Chunghwa Telecom's Tier-1 suppliers but is not Chunghwa Telecom's Tier-1 supplier.
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Significant supplier: A supplier that directly provides products or services to Chunghwa Telecom and meets any of the following conditions:
- The annual accumulated procurement amount reaches NT$50 million or above.
- It has high business relevance to the Company due to limited qualifications, specific or exclusive equipment binding, supply of critical parts or components, or other factors of irreplaceability.
- It has regulatory compliance concerns in the most recent year, or presents country-, sector-, or commodity-specific potential ESG risk factors and is assessed as a key management target.
- Significant suppliers are determined based on their significant business relevance to the Company and their potential risk of significant ESG impacts.
Supplier Assessment Process
Chunghwa Telecom’s supplier assessment process is centered on the Supplier Code of Conduct and ESG Compliance Checklist and refers to standards and methodologies of a recognized industry or multi-stakeholder initiative such as the Responsible Business Alliance (RBA) Code of Conduct. Building on this foundation, Chunghwa Telecom designs ESG self-assessment questionnaires, supporting evidence reviews, on-site visits by company employees, and on-site audit items by commissioned third-party verification bodies.
The assessment covers environmental, social, and governance dimensions. Based on suppliers’ business relevance, procurement amount, risk level, and management maturity, Chunghwa Telecom conducts desk assessments, on-site assessments by company employees, or on-site audits by commissioned third-party verification bodies.
For substantial actual or potential negative impact issues identified through assessments, the Company requires suppliers to submit corrective action/improvement plans and follows up on their progress and completion of improvements. These results serve as the basis for subsequent supplier rating management, improvement guidance, and capacity-building measures.
| Assessment Approach | Description |
|---|---|
| Supplier Desk Assessments with Systematic Verification of Evidence | Suppliers are required to complete an ESG self-assessment questionnaire. Suppliers with procurement amounts reaching a certain threshold must also provide supporting evidence such as ESG policies, management system certificates, and management documents. Chunghwa Telecom's employees and external consultants conduct systematic verification of evidence to assess suppliers' management commitments, implementation status, and potential risks in environmental, social, and governance issues. |
| Supplier On-site Assessments by Company Employees (2nd Party Assessment) | Chunghwa Telecom's employees regularly conduct on-site visits and assessments of suppliers. Through on-site inspections, document and record reviews, interviews, and verification of information, Chunghwa Telecom assesses suppliers' ESG implementation status, performance, and risks. |
| Supplier On-site Audits by Commissioned Third-party Verification Bodies | Each year, Chunghwa Telecom selects significant suppliers and commissions a third-party verification body (SGS-Taiwan) to conduct on-site audits in accordance with the Chunghwa Telecom Supplier Code of Conduct and ESG Compliance Checklist, with reference to recognized standards such as the Responsible Business Alliance (RBA) Code of Conduct. Through document reviews, on-site inspections, and interviews, Chunghwa Telecom verifies suppliers' ESG implementation status and risks. |
Supplier Development Process and Measures
To empower suppliers to enhance their ESG management capabilities, Chunghwa Telecom provides differentiated supplier development measures based on supplier assessment results, risk level, and improvement needs. These measures include providing system requirements, implementation explanations, contract clauses, forms and documents, benchmark cases, and carbon management practice information related to supplier sustainability management through the supplier procurement system, Chunghwa Telecom Supplier Net-Zero Sustainability Academy, ESG education and training, environmental education, ESG Supplier Conference, and decarbonization workshops. These efforts help suppliers understand Chunghwa Telecom’s sustainable supply chain management requirements and gradually build their ESG and carbon management capabilities.
For suppliers with identified deficiencies or substantial actual/potential negative impacts, the Company requires them to submit corrective action/improvement plans. As needed, the Company supports suppliers in addressing ESG management gaps through remote consulting, document reviews, on-site visits, or improvement recommendations, and tracks their improvement progress and completion status. For key suppliers, Chunghwa Telecom also promotes the CDP Supply Chain Program, Supplier Decarbonization Pathway Workshops, environmental education, and other capacity-building measures to empower suppliers to enhance their capabilities in GHG inventories, carbon disclosures, decarbonization target setting, and ESG management systems, thereby enhancing the overall sustainability resilience of the supply chain.
| Category | Description |
|---|---|
| Supplier ESG Program Information/Trainings | Through its supplier procurement system, ESG education and training, and the ESG Supplier Conference, Chunghwa Telecom provides the Supplier Code of Conduct, contract clauses, sustainable supply chain management requirements, implementation guidelines, and related forms and documents. |
| Supplier Access to ESG Benchmarks and Case Studies | Through the Chunghwa Telecom Supplier Net-Zero Sustainability Academy, ESG Supplier Conference, environmental education, and decarbonization workshops, Chunghwa Telecom provides access to ESG benchmarks, case studies, sustainability management trends, environmental sustainability issues, and carbon management practices. |
| Supplier Support on Implementation of Corrective/Improvement Actions | For suppliers with identified deficiencies or substantial actual/potential negative impacts, Chunghwa Telecom requires them to submit corrective action/improvement plans. As needed, Chunghwa Telecom provides remote consulting, document reviews, on-site visits, or improvement recommendations, and tracks improvement progress and completion status. |
| In-depth Technical Support Programs | For key suppliers, Chunghwa Telecom promotes the CDP Supply Chain Program, Supplier Decarbonization Pathway Workshops, environmental education, and other in-depth technical support programs to build capacity and strengthen ESG performance, empowering suppliers to enhance their capabilities in GHG inventories, carbon disclosures, decarbonization target setting, and ESG management systems. |
KPIs for Supplier Assessment and Development
| Item | 2025 | Target for 2025 |
|---|---|---|
| Number of unique significant suppliers supported with development measures | 190 | - |
| Percentage of unique significant suppliers supported with development measures | 82.61% | - |
| Number of unique significant suppliers assessed via desk assessments/on-site assessments | 213 | - |
| Percentage of unique significant suppliers assessed via desk assessments/on-site assessments | 92.61% | 90% of unique significant suppliers |
| Number of unique significant suppliers assessed with substantial actual/potential negative impacts | 5 | - |
| Number of unique significant suppliers with substantial actual/potential negative impacts with agreed corrective action/improvement plan | 5 | - |
| Percentage of suppliers with substantial actual/potential negative impacts with agreed corrective action/improvement plan | 100% | 100% |
| Number of unique significant suppliers with substantial actual/potential negative impacts that were terminated | 0 | - |
Notes:
- The percentage of unique significant suppliers supported with development measures is calculated as the number of unique significant suppliers supported with development measures divided by the total number of unique significant suppliers.
- The percentage of unique significant suppliers assessed via desk assessments/on-site assessments is calculated as the number of unique significant suppliers completing desk assessments/on-site assessments divided by the total number of unique significant suppliers.
- Unique significant suppliers assessed with substantial actual/potential negative impacts have been required to submit corrective action/improvement plans and are subject to follow-up tracking; none of these suppliers involved significant potential environmental impacts.
Document
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Third-party verification statement