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

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:

• Country-specific risks: Review the important national laws and the political and economic landscapes internationally to incorporate and update relevant threats in the assessment list, such as disruption of transportation and logistics, promulgation of new human rights laws and regulations, and carbon fee levies.
• Sector-specific risks: Study the significant ESG issues faced by the cement industry, to which TCC belongs, and include the issues in the assessment list, such as compliance with environmental laws and regulations, water scarcity, and community relationship risks.
• Commodity-specific risks: Analyze the risks in the value chain of TCC products by assessing the potential impacts from the respective procurement categories on the threat list, such as the use of raw materials that violate regulations, waste management, and compliance with labor laws and regulations.

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.

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. From 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, toxic emissions, and GHG management. From 2022, this questionnaire add a biodiversity question to understand the impact management of suppliers' operations on biodiversity.

• For the integrity of the environment, TCC will never use any materials from unknown or illegitimate sources. Suppliers with authorized licenses are subject to regular inspections to verify the validity of these licenses. Also, we have been performing environmental rehabilitation works to mitigate excavation impacts.


• According to health and safety considerations, suppliers are required to implement the appropriate measures for the management of occupational safety and health, as well as the storage and disposal of hazardous waste.


• To conform to humanity and geography, we encourage suppliers to execute sustainable management, minimize social costs, and create value and benefits for the Company and the entire society.


• We are dedicating to affecting proper sourcing and allocation of materials based on the weather conditions.

Supplier Sustainability Evaluation Process

• Suppliers are required to respond to the sustainability self-evaluation questionnaire each year and provide supporting materials in writing, such as policy documents, permits, and implementation records for each item. The buyers of TCC and the commissioned consultant team are to carry out the desk review of response results to verify, item by item, the completeness of questionnaire responses and the credibility of supporting materials and assign a score on the basis of their conformity. On-site inspection is arranged for certain suppliers, in which the buyers of TCC or the commissioned consultant team conduct interviews and random checks of their supporting materials. For high-risk suppliers, on-site assessments are carried out by an independent accredited auditing body (3rd party assessment).
• After the risk assessment based on the supplier review, TCC issues correction action plans to high-risk suppliers, followed by improving the sustainability resilience of the suppliers via education, training, and workshops. During the CAP implementation process of high-risk suppliers, TCC will cooperate with external consultants to provide guidance and assistance.
• The results of supply chain management and supplier sustainability evaluation of TCC are disclosed on the corporate website and Sustainability Report thereof, and the Sustainability Report has been audited and assured by a third-party.
• At the Supplier Convention, TCC informed the process and requirements of its Supplier ESG Program, presented Outstanding Supplier Awards to suppliers with an outstanding ESG performance for other suppliers to learn from and align themselves with, and created Sustainability Progress Award as encouragement to the top 3 suppliers with the best progress made.

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：

• General Information
• Key Contact Information
• Financial Information
• Associated Companies
• Location
• Quality Assurance
• Region of Supply
• Insurance
• Health and Safety
• Environmental Efforts
• Society and Ethics
• Customers
• Service and Product
• Legal Declaration

Sustainable Circular Economy

• TCC Group Holdings CO., LTD. has incorporated the ESG (Environmental, Social, Governance) and SRI (Social Responsible Investment) principles into the Company's governance matrix. In respect of the ESG principles, we are committed to protecting the environment ("E") and giving more consideration to our culture and society ("S") while ensuring the proper governance ("G") of the Company. Based on the environmental aspect, our primary concerns include preserving biodiversity, preventing, and controlling ecological issues. For the cultural aspect, we focus on providing compensation to and taking care of the indigenous communities impacted by our excavation, as well as the preservation of cultural heritage; in terms of our society, we strive to improve working conditions, work safety, and the health and safety of the communities. For instance, our efforts in the area of waste management (incorporating the "3 Rs"— reuse, recycle and reduce) will help achieve the objectives of reducing carbon emissions, minimizing pollution, and creating values for the renewable and green supply chain as well as our future, facilitating the Company’s ideology of The Future is worth it.
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  Supplier Code of Conduct   Supplier Management Policy Statement

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.