Supply Chain Management

Strategy

To ensure the sustainable development of the supply chain, TCC Group Holdings CO., LTD. (the "Company") places significant attention on environmental protection, social responsibility, occupational safety and health, and sustainable and circular growth of the supply-demand interactions in our business.

The purpose of the supplier evaluation is to ensure our suppliers' consistency and compliance with the quality, quantity, delivery, service, HSE (health, safety, and environment) and production requirements. The Company also hopes to assist our suppliers to improve quality and capability, achieving the goal of circular and sustainable development.

The Company adheres to strict procurement rules regarding the quality, quantity, and source of our materials. Illegally-sourced materials and materials with unknown sources are strictly prohibited. We only cooperate with suppliers who are dedicated to only using legally-sources materials, have emphasis on waste management and environment restorations, and aim to maintain and protect surrounding natural resources.


Commitment

Concerning the frequent extreme weather events, changes in the suppliers' production capacity, and the features of minerals, we have included regular monitoring and analysis of the weather conditions and rainfall at the mines as a part of our supplier management system. Our suppliers are also required to conduct regular reviews on the supply lead time and volume to save fuel and prevent excess fuel consumption due to transportation and logistics issues.

Other aspects of our commitment are setting up a supplier evaluation mechanism and asking contractors to sign letters of undertaking compliance with the safety and health requirements (the "HSE Letter of Undertaking"). In addition to our commitment, TCC has introduced advanced technologies, upgrading the equipment, reducing the emission of SOx, NOx and exhaust fumes; and we cooperate only with suppliers that source materials through legal channels and are committed to making environmental improvements (e.g., using green building materials and low VOC materials). Also, to align with our commitment to the environment, we conduct regular audits to ensure the quality (e.g., the sulfur and ash content of the coal) of the supplies through increasing interaction with major suppliers.

Finally, the Company strives to adhere to the motto of "stay humble, maintain harmony, stay honest, and be trustworthy" in fulfilling its corporate responsibilities and achieving sustainable development. Therefore, to approach such goals, we are dedicated to shouldering our social responsibility of promoting the economy, protecting our environment and society, and encouraging our clients, employees, suppliers, and communities to work together


Supply Chain Management

Supplier Evaluation Document Review On-Site Inspection Capability Goodwill Credibility Finance Credit HSE Quality Environment Production

Suppliers are required to sign the Contractor‘s Safety and Health Responsibility Commitment, and The legal department at TCC reviews the standard contract of suppliers that contain clauses pertaining to ESG on a regular basis to ensure the spirit in the CoC is embedded in the contract. In addition, TCC acquired ISO 37001 Anti-Bribery Management certification in 2021. The Procurement Department is audited yearly to ensure that the procurement mechanisms are in conformity to business ethics, anti-money-laundering, and anti-trust.

In addition, the suppliers with a low performance in the evaluation, any environmental or OHS concerns, or refusing to sign on the letter of undertaking shall not be considered for use. Based on the circular auditing of the supplier evaluation, visit to suppliers and education/trainings are conducted actively from time to time, such as the safety, health, and environmental education, safe operation, or occupational accident prevention instruction prior to entering the plant for work. TCC communicated with its suppliers actively regarding the environmental protection needs and OHS requirements in force, took the lead to fully replace transport vehicles with those low in pollution, among others.


Significant Supplier Management

Significant Supplier is not Critical Supplier, Significant Supplier is defined by TCC as a supplier that is critical to the quality and delivery of the Company’s product manufacturing, reaches a certain procurement amount or ratio, or presents a high ESG risk.

In addition to the consideration of procurement amount and of the irreplaceability of commodities, TCC conducts assessments of suppliers’ threats and impacts each year. External consultants are commissioned to inventory the ESG aspects of the following risks and include them in the assessment list to assess each of the six categories of TCC suppliers so as to better identify and capture the risks on the supply chain:

The assessment result will be incorporated into the design of the annual supplier ESG questionnaire to capture the risk exposure of suppliers. After the ESG risk assessment is carried out based on suppliers’ responses, the assessment result will be included in the assessment of Significant Tier-1 Suppliers.

2022
Total number of Tier-1 suppliers 892
Total number of significant suppliers in Tier-1 93
% of total spend on significant suppliers in Tier-1 88.76%



Requirements for Sustainable Suppliers Environment Health Safety Economy Culture Climate

TCC commissioned external consultants to design a questionnaire with reference to OECD Due Diligence Guidance for Responsible Business Conduct and in line with the domestic and international sustainability trends and the key sustainability topics in the cement industry. In 2022, the items in the sustainability evaluation of TCC covered 26 sustainability-related topics, including corporate governance, supplier management, occupational health and safety, human rights, environmental management, and GHG management. In 2022, this questionnaire add a biodiversity question to understand the impact management of suppliers' operations on biodiversity.


Supplier Sustainability Evaluation Process


New Suppliers Evaluation and Sustainable Circular Economy Management

Dow Jones Sustainability Index (DJSI) / Certifications relating to environmental protection or management of hazardous substances (ISO14001, TS16949, QCO80000)

Criteria used in the Evaluation Mechanism to Identify Sustainable Suppliers:


Sustainable Circular Economy


Internal and External Education and Training

The buyers are to act as a bridge between the Company’s ESG system and suppliers on the front line. TCC commissions external consultants to conduct supplier ESG training for buyers, covering topics like ESG knowledge and Supplier ESG paper and on-site assessment techniques so as to evaluate in an accurate and effective manner in the suppliers ESG review as well as improve the ESG performance in the follow-up counseling to suppliers.