Responsible Supply Chain
Sustainable Chain Management
Products Compal developed include notebook PCs, smart phones, tablet PCs, e-books, smart watches, televisions, and IoT, etc., and also include hundreds of related important components like faceplates, touch screens, camera modules, fingerprint recognition modules, batteries, battery chargers, charger cables, electronic parts and components, electromechanical components (printed circuit boards, flexible print circuits, acoustic components, etc.), and mechanism elements. Suppliers in Compal’s supply chain consist manufacturers of electronic parts and components around the world and are mainly located throughout in Taiwan, China, and parts of Europe and America. Supplier factories are located in Taiwan and throughout China (mostly in Sichuan, and the coastal regions of southern and eastern China).
◎ Management framework - Responsible Business Alliance Code of Conduct
Compal joined the Responsible Business Alliance (RBA) in 2011 and adheres strictly to the RBA Code of Conduct on supply chain management, risk assessment, and on-site audits. The following mechanisms provide swift and effective control over supplier quality and conduct.
Note: RBA Code of Conduct: http://www.responsiblebusiness.org/code-of-conduct/
Compal seeks to raise the efficiency of sustainable supply chain to international sustainability standards. As a responsible buyer, Compal requires all new suppliers to sign the “Compal Purchasing Contract” with provisions on information security as well as requiring the compliance with all international, national, and regional environmental laws and regulations from the product in the transaction. Suppliers are also required to have implemented international quality and environmental standards such as ISO 9001, ISO 14001, ISO 13485, ISO 17025, IATF 16949 and so on depending on the product category. The vendor selection process also takes their associated ESG performance into consideration. Topics such as GHG, water resource, and waste gaining growing global traction. The corresponding ISO standards have therefore been incorporated by Compal into supply chain management.
As a member of RBA, we require suppliers to accept their social responsibility and sign the “Letter of Commitment to RBA Code of Conduct” covering the five RBA dimensions of Labor, Health and Safety, Environment, Ethics, and Management. The “Compal Supplier Code of Conduct” was adjusted and amended in recent years to keep up to date with international ESG standards. We also raised our expectations of suppliers in accordance with the RBA Code of Conduct. Routine purchasing at Compal now look at external information and infraction records to determine whether the supplier satisfies the requirements of the “Compal Supplier Code of Conduct” and reduce the supplier’s potential ESG risks. At the same time, suppliers must also sign the “Prohibition Non-support/Non-use of “Conflict Minerals” Statement” to help suppliers understand and commit to the importance of ban on conflict minerals.
In terms of sustainability risk management, Compal conducts a sustainability assessment of all suppliers every year. The assessment is conducted through the RBA SAQ questionnaire and the assessment results provide a picture of the supplier’s sustainability risks. Suppliers with high sustainability risk are audited using the RBA VAP and deadlines set for corrective action. Annual supplier self-assessments and audits are used to realize the goals of promoting social responsibility and improving sustainability performance together.
Compal regularly conducts education and training on sustainable supply chain topics for purchasing employees as well. External consultation resources are periodically used to keep employees up to date on the latest trends in supply chain management as well as enhance their ability to communicate sustainability topics and ESG performance to suppliers. As international sustainability topics continue to pick up pace, we invited suppliers to follow our lead and the Compal philosophy in taking an interest in social topics such as the environment, labor, health and safety. We are continuing to improve supply chain resilience through the abovementioned actions.
■ Supplier Risk Management
Compal issues RBA SAQ questionnaires to Tier-1 suppliers every year to evaluate their performance in the Labor, Health and Safety, Environment, Ethics, and Management Systems aspects. 1070 suppliers were assessed in 2022 and the supplier SAQ survey response rate was 99%. Suppliers were then rated as high, moderate or low for sustainability risk based on their SAQ responses. Each level of risk was then managed accordingly.
Compal adopts two standards to identify suppliers with high ESG risks. (1) The RBA SAQ responses of suppliers. The SAQ questionnaire was divided into major, moderate and minor topics. Those that violate more than 5 major topics or answered less than 65% of questions correctly were identified high risk suppliers. Suppliers that violated less than 4 major topics or answered more than 65% of questions correctly was classified as low-to-moderate risk. (2) The ESG inherent risks standard. Compal formulates “Suppliers ESG Audit Procedures” applying supplier screening approach that encompasses environmental, social, governance, and business relevance. High-risk suppliers are identified at the country-specific, sector-specific, and commodity-specific. Examples: Supplier is labor-intensive, uses hazardous chemicals or radioactive substances, produces toxic and restricted waste, produces industrial effluent, produces industrial waste emissions, provides catering services, provides dormitories, or had been exposed by the government or NGO. These are considered high-risk suppliers. High-risk suppliers are included in the audit list for the next stage.
In addition to sustainability risk management, if there is a major international disaster then Compal conducts supply risk investigation into the status of critical suppliers in the affected region. The impact on supplier is determined and the corresponding measures adopted to maintain continuity of operations. If there is a change in national policy, suppliers are investigated by Compal as well to ensure compliance with national regulations and that there will be no interruption to supply.
■ Procurement System Platfrom and Communication
Compal added a Supplier Opinion section on the CPS (Compal Procurement System) in 2015 to serve as a communication channel with its suppliers. CPS is also used to make major announcements to suppliers to keep help suppliers stay up to date on the latest sustainability trends and best practice. Suppliers for example are notified of updates to RBA documentation. We also host an annual supplier conference in conjunction with the Safety and Environmental Protection Department. In 2019, 3 supplier conferences were held in Taipei, Kunshan (China), and Chongqing (Sichuan, China). The conferences covered changes and system upgrades to the restricted environmental substance management standard, Compal CSR targets, and international initiatives. They provided a way of communicating more directly with suppliers. Online supplier seminars and meetings were held by Compal instead between 2020 ~ 2021 due to COVID-19 to stay in touch with suppliers. The 2022 online supplier conference focused on global developments in green product legislation and key tasks, RBA VAP v7.0 updates, conflict minerals, introduction to the Compal supplier management system, and environmental education in the supply chain. Compal uses supplier conferences to communicate the latest trends in sustainable supply chain to suppliers and work with suppliers to continue making improvements to ESG performance. Up to 205 suppliers took part.
■ Local Procurement
The key operating locations of Compal include our Taipei Headquarters in Taiwan, production bases in Sichuan and the coastal regions of eastern China, and production base in northern Vietnam. Compal has been actively increasing the ratio of local procurement in recent years in response to the international push on GHG reduction, to improve the efficiency of production and shipping operations, contribute to the local economy, and reduce the consumption of resources during transportation. Mentoring of local vendors, strengthening of local supply chains and boosting of local manufacturing capacity all aimed to reduce dependence on oversea procurement.