Having trustworthy and reliable supplier partners in the value chain is an important key to enterprise operation. Through management measures such as the supplier contract performance management and regular audits can enable effective and systemic exchanges and communication with suppliers, connecting the suppliers and TSC to create a better and sustainable industrial environment.

　　TSC signs contracts with all of its suppliers. During the compliance period, the manufacturer acceptance examination is conducted before entering the factory. If quality and quantity do not comply with the purchase contract after acceptance, the supplier will be notified of a deadline for improvement. The terms of each contract require the suppliers to provide labor and health insurance to their employees. Once suppliers are found to be in violation of environmental protection, labor or human rights, they will be immediately requested for improvement within a limited time and may be fined for breach of the contract. If they do not listen to advice or repeatedly violate the terms, the contract with such supplier may be terminated.

　　We also strengthen the safety and health management of contract operations, and all units shall inform contractors the work environment, hazard factors and safety and health related regulations of the units in advance when the project is delivered. In addition, TSC’s “Precautions for Occupational Safety and Health of Engineering and Labor Services” shall be specified in the contract and obligate the contractors to implement safety and health management and conduct automatic inspections to prevent accidents during construction operations in accordance with Occupational Safety and Health Act and relevant regulations. To ensure that when occupational accidents occur, the contractors’ workers can obtain reasonable claims and reduce the risk the company has to take, all units handling contracted projects with the contract amount exceeding the announced amount (contracting projects of engineering, labor, and property procurement including installation), employer’s accident liability insurance (or third-party accident insurance) with the coverage of NTD 8 million or more should be insured (the claim amount from social insurance can be deducted). For any contracted project whose amount does not reach the announced amount, employer’s accident liability insurance with the coverage of NTD 6 million should be insured (the claim amount from social insurance can be deducted). For labor services or construction contracts below NTD 100,000, it is required to establish a simple contract and handle the prescribed safety and health management issues.

　　In 2023, the suppliers did not have significant or potential negative economic, environmental, and social (including human rights) or termination of the cooperative relationship with TSC due to poor execution during the contract performance period.

　　Except for the office building of Marketing Business Division that adopts Security Alarm System, the access control and security of all units of Taiwan Sugar Corporation is entrusted to the security company. Security personnel all received professional courses and firstaid personnel training, and they also have to receive an 2-hour human rights related education every year. According to statistics, there are a total of 136 security personnel in Headquarters, Operation Branches, Divisions and Branches in 2023, and 136 of them received human right education training, with the training rate reaching 100%.

　　TSC conducts assessment of its partner suppliers in terms of the technical capacity, production performance, corporate image and responsibility and contract performance reliability so as to maintain its market sensitivity and keep abreast of the dynamics of supplier and if necessary, TSC will perform or entrust a third impartial inspection agency to conduct on-site inspection of the factory and the assessment results will be included in the score. Related defects will be asked to improve to ensure all the products and services the suppliers provide meet the needs of TSC. The assessment results are also used as reference for contract renewal.

• List of the Ratio of Food Suppliers Meeting the Food Safety System Standards
  

Note：

1. Ratio of food suppliers meeting the food safety system standards = (the 2023 purchase amount of the food suppliers meeting the food safety system standards of the business division/ the 2023 purchase amount of the business division) *100%
2. Definition of supplier: A manufacturer that provides raw materials (packaging materials,equipment, and labor services excluded). Definition of OEM: For products not showing TSC as the manufacturer on the packaging. 
   

• Assessment Results of Food Industry Suppliers
  

　　To ensure the quality and safety of TSC branded foods, TSC conducts strict quality, safety, and hygiene management of the outsourced foods. In addition to sending non-scheduled staff from various units to station in the factories to supervise the manufacturing, the Quality Management Committee also organizes inspection teams irregularly to conduct on-site inspections without prior notice to thoroughly check and inspect the OEM factories. The inspection content shall follow the 69 items of inspection record of OEM factory listed in the “Key Points for the Quality Management Operations of the Manufacturing Companies” and the audit results shall be included in the reference for assessment scores for annual contract renewal. The manufacturers with the total assessment score reaching 80 points are entitled to renew the contract.

• Assessment Results of OEM Factories in 2023
  

Note: On-site audits for foreign OEM factories are conducted every three years.

　　For TSC’s project contractors, the principle of inspection scope of the construction quality inspection is no less than 10% of the ongoing construction projects exceeding the announced construction costs of the year, as prescribed in the Key Points for the Establishment of TSC’s Construction Quality Inspection Team. For projects with the purchase amount of NTD 20 million or more, at least 1 inspection should be conducted. The selection of contractors is based on the prescriptions of the Government Procurement Act in an open, just and fair manner. Domestic companies are given priority, and the “Precautions for Occupational Safety and Health of Engineering and Labor Services” is formulated as part of the contract, and with the strategies of counseling, auditing and advocacy, TSC is actively engaged in the counseling of contractors’ safety management, strengthening the industrial safety counseling and reinforcing the safety awareness of the laborers in the workplace to safeguard the labor safety. There were no violations of relevant provisions of the contract in 2023.

　　The dealership is concerned with the service quality of TSC products to consumers. We plan the dealership based on the overall marketing strategy and merchandise access strategies (access coverage, number of access levels, single access or multiple access, vertical marketing systems or horizontal marketing systems) and follow the Dealer Selection Criteria and the Government Procurement Act when selecting and auditing dealers. The performance management of dealers is handled in accordance with the principles of the management of suppliers and contractors.

　　TSC conducts ESG evaluations annually for suppliers with procurement amounts exceeding NTD 5 million to complete an ESG self-assessment questionnaire, whose content would be adjusted each year based on the current situation of TSC, the international trends and reference to GRI Standards. In addition to the introduction of GRI Standard Topics, specifications and regulations of RBA, Ecovadis and ISO 20400 were also referred in the revision of the questionnaire, which is divided into five aspects, including environmental, labor rights, human rights, social and product liability aspects. A total of 119 suppliers completed the self-evaluation in 2023.

　　According to the self-evaluation results, the suppliers are divided into three levels, gold, silver and copper based on the scores. All the suppliers in this evaluation scored more than 60 points, with 100% of passing rate. Among them, 93 suppliers achieved a Gold rating with scores above 85, accounting for 78% of the total. In 2023, all our suppliers did not use child labor or restrict their employees’ freedom of association. In addition, further analysis of the five major aspects was conducted, and each aspect scored more than 60 points averagely. The scores were lower only in the environmental aspect because TSC sets higher requirements in environmental management, leading to the lower scores among the suppliers. However, all the suppliers comply with relevant laws and regulations. We will refer to the results of the suppliers’ self-assessment and adjust the contents of the questionnaire. TSC will strengthen the management of suppliers with lower assessment scores to improve the procurement system and enhance the efficiency of procurement. In the future, we will also continue to promote the assessment of the five major aspects of corporate social responsibility in our suppliers of all categories to enhance our partners’ implementation and management of ESG.