Supplier Social and Environmental Management Processes | ACER ESG
Supplier Social and Environmental Management Processes
Management Processes
We have adopted the RBA Code of Conduct and, with reference to the RBA Supplier Engagement Process, make use of a range of supplier social and environmental management approaches, engaging with suppliers through multiple channels and working with them to improve their capabilities. The implementation of such management approaches also entails assessment, validation, and ongoing improvement thereof. Through management measures at every stage, Acer and our suppliers are able to work together effectively to establish a sustainable supply chain with a focus on environmental and social issues. New suppliers pass a social and environmental responsibility risk assessment and sign an RBA Code of Conduct compliance statement before they become official suppliers.
Supply Chain Social and Environmental Management Process
Risk Assessment 1
We initially screen supplier risks based on country risk, industry risk, product risk, and importance. Filtered suppliers are then included in the next phase of management.
Supplier Code of Conduct Compliance Declaration
Suppliers are required to sign the Supplier Code of Conduct Compliance Declaration, comply with the RBA Code of Conduct, and provide social and environmental information as required by Acer, while also ensuring that they and their operations comply with the RBA Code of Conduct. In addition, we include relevant provisions in procurement contracts, requiring new suppliers to sign onto them.
Supplier Self-Assessment Questionnaire
All suppliers found to be medium to high risk in Risk Assessment 1 are required to complete a Supplier Self-Assessment Questionnaire (SAQ) to conduct self-assessment on the four aspects of labor, health & safety, ethics, and the environment, forming the basis for our management of supplier social and environmental liability risks.
Risk Assessment 2 (Desk Assessment)
Based on the results of previous audits, the risk level of the factory location, and the supplier's business relationship with Acer, we conduct a second stage of risk assessment taking into account stakeholder concerns. It is carried out through desk assessment, supplemented by remote audits conducted via phone or video conferencing.
On-Site Audits
Suppliers are encouraged to participate actively in the RBA Validated Audit Process (VAP) to reduce the burden of on-site audits by different customers. For the new and potentially high-risk suppliers, the third-party verification companies are engaged to conduct social and environmental audits. Acer's audit manager leads the audits and adopt comprehensive RBA audit tools, aiming to achieve dual objectives of Acer’s leadership in-management and the third-party objective audits.
Corrective Action Verification
We require our suppliers to submit a written Corrective Action Report (CAR) based on audit findings within 30 days of receipt of the audit report. A written review by Acer's audit management staff will be confirmed on site during the following year's on-site audit.
Communication
We have a close partnership with our suppliers and aim to be on the same page in terms of social and environmental responsibilities. We engage in bilateral communications with suppliers on ESG issues through working groups on topics, annual Supplier ESG Communication Meetings, and quarterly business review meetings.
Education and Training
In addition to requiring suppliers to comply with local regulations and Acer's standards, we also provide training and education on the latest social and environmental responsibility trends to enhance Acer's supply chain's ability to take on sustainability challenges.
Rewarding and Elimination
To enhance suppliers' sustainable development management performance, Acer has established a reward and elimination mechanism based on quarterly assessment results. The assessments consider six dimensions, rating suppliers on a five-level scale to identify and reward top performers with increased procurement and collaboration opportunities, while eliminating underperformers to improve overall supply chain capability.
New Supplier Assessment
New vendors pass a social and environmental responsibility risk assessment and sign an RBA Code of Conduct compliance declaration before they become qualify vendors.
Supplier screening mechanism and tier-based management
Supplier Screening and Evaluation
In accordance with Acer's supplier social and environmental management process, supplier screening and evaluation are carried out. The first-tier supplier screening includes an assessment of country/region, industry, and product risks. The supplier evaluation encompasses operations, governance, social, and environmental aspects, utilizing the RBA self-assessment questionnaire (SAQ) as the scoring method. The second-tier supplier risks are evaluated by the first-tier suppliers, taking into account screening criteria such as material attributes, procurement amount, and ESG risks, among other factors.
| Supplier Screening | Risk and Evaluation Criteria | Relevant Issues |
| Aspects of suppliers screening | Country-specific risk | Regulatory environment, labor conditions, resources, and geographical environment |
| Sector-specific risk | Sector-specific processes, workplace environment, and safety | |
| Commodity-specific risk | Low-carbon manufacturing, energy efficiency, supply chain management, and responsible mining | |
| Methodology for suppliers screening | Business relevance | Market leadership, key technologies, quality, and diverse production bases |
| Governance | ESG information disclosure, anti-corruption and integrity, information security, stakeholder communication, and supply chain management policies | |
| Social | Human rights, ethics, health and safety, labor practices, responsible mining, labor hours management, and training | |
| Environmental | Greenhouse gas reduction targets, carbon management performance, greenhouse gas emissions and allocation, energy and renewable energy use, carbon footprint, hazardous substance control, environmental regulatory compliance, waste management, and biodiversity |
Evaluation of significant suppliers
| Supplier Category | Total number of significant suppliers | Number of suppliers assessed with substantial actual / potential negative impact | Percentage of Total Procurement Expenditure |
First-tier supplier
| 25 | 3 | 82% |
Non-first-tier supplier
| 129 | 24 |
|
| Total number of suppliers | 154 | 27 |
|
All significant suppliers are required to conduct on-site audits and take corrective action plan (CAP) for any finding issues (see
Supply Chain Audit and Improvement section). After reviewing the audit results, suppliers with significant potential negative
impacts are selected and invited to participate in supplier capability improvement activities. (see the Improving Supplier
Capabilities section.)
Supplier Rewarding and Elimination Mechanisms
Acer has established a supplier rewarding and elimination mechanisms to encourage suppliers to accelerate and move toward the sustainable development. Through quarterly assessments, measures by six dimensions which including supplier core competence and ESG, we identify suppliers which outperform in sustainable development and provide them with higher ratios in procurement along with priority to join new product development collaboration. We eliminate underperforming suppliers in order to refine and joint improvement in the supply chain.
Incentive Mechanism
- Evaluation dimensions: quality, innovation/technology, speed/responsiveness, delivery, cost, risk, and ESG.
- Evaluation levels and scores: Classified into five levels based on ratings of each dimension, A (>=90 points), B (89-80 points), C (79-70 points), D (69-60 points), and E (<60 points).
- Frequency: Quarterly
- Rewards: Suppliers that have received an A or higher for three consecutive quarters will be given a higher procurement ratio and priority in adopting of new products.
Elimination/Exit Mechanism
For suppliers rated as D or below, in addition to reducing their procurement ratio as appropriate, they are also required to develop improvement plans and implement regular review mechanisms. The elimination mechanism is as follows:
- Suppliers ranked as D or below for two consecutive quarters will be required to undergo a reevaluation of supplier selection and
management. - The suppliers ranked as E for three consecutive quarters, will be disqualified and revoked their future collaborations with Acer after assessment and discussion of evaluation meeting.