On-site Audits | ACER ESG
Acer’s suppliers must treat their staff in a respectful manner, using environmentally responsible manufacturing processes and providing safe working conditions. We have adopted the latest version of the RBA Code of Conduct, which covers the five major aspects of labor, health and safety, the environment, ethics, and management systems. This system is used in our on-site audits of suppliers with regard to both social and environmental responsibility. Through different auditing methods adopted based on the particular nature of the supplier’s operations and their implementation of the RBA Code of Conduct, we can verify any lapses in the aforementioned five areas and require suppliers take corrective steps by a given deadline. Thus we are able to continually improve the social and environmental responsibility of Acer’s supply chain. For suppliers with priority deficiencies or difficulties in proposing improvement solutions, we will discuss and track progress by phone or videoconferencing to ensure the timeliness and effectiveness of improvement measures. If, after review, there are still significant hidden issues, we will refer the procurement department to take necessary actions, including inclusion in QBR meetings of senior managers of both suppliers and purchasers, order adjustments or replacements, etc.
2022 On-Site Audit Results
More than 260,000 direct supplier employees were audited, 4,318 direct employees were interviewed
Acer uses risk assessment results of the ESG scorecard as the basis for performing on-site audits and assessments.We examine the country risk, manufacturing processes, and products of each supplier, along with results of previous audits, as well as taking into account the concerns of stakeholders when setting out our annual audit plan.
In 2022, we conducted a total of 105 audits, 100% of which were on-site audits. These include two new suppliers that began production of Acer products in 2022. Meanwhile, one supplier that failed to meet Acer's social and environmental requirements was removed. Implementation methods include: third-party audits (CMA or AMA), RBA Validated Audit Process (VAP), BSCI, SA-8000, accreditation, etc.In 2022,more than 260,000 direct Supplier employees were audited and 4,318 direct employees were interviewed,with more than 80% using the RBA Validated Audit Process (VAP).
Total Implementation Rate of On-site Audits
Percentage of Audits of Higher Risk First-Tier Suppliers
For the 2021 RBA audit with a total score of less than 120 (out of 200), there were 3 companies with higher risk.The Supplier performed the third-party review audit again in 2022 after achieving concrete improvements. There were 3 on-site factory audits, with a total audit rate of 100%.
VAP Audits Performed by a Third Party
Per the above description, between 2008 and 2022 a cumulative total of 986 first-tier Supplier audits have been carried out. In addition, to effectively improve implementation through the supply chain, Acer has required its first-tier suppliers to conduct pre-audit risk assessments of their next-tier suppliers of critical raw materials since 2017. After aggregation, high-risk suppliers accounted for 6% of the total, with mediumrisk suppliers at 22%.We continued to carry out auditing activities in 2022 along these lines, auditing a total of 893 second-tier factories. In 2021, we deepened our implementation across the supply chain, extending our auditing activities to third-tier suppliers, of whom we conducted 422 audits in 2022.
In 2023, we still plan to conduct on-site audits of 70 firsttier supplier manufacturing plants, covering 140,000 direct employees and interviewing 2,500 other employees. The annual RBA site audit compliance targets are: labor: 87%, health and safety: 87%, environment: 95%, ethics: 95%, management systems: 95%. We will continue to pursue auditing activities for secondand third-tier suppliers to actively improve the workforce and operating environment and deepen the long-term positive impact on the overall supply chain.
2023 RBA Site Audit Compliance Targets
Health and Safety
Supplier Audit Categories and Number of Audits,2018-2022
- First-Tier Supplier Audits = VAP (or SA8000) + Full Audit + Surveillance Audit
- Cumulative First-Tier Supplier Audits = Cumulative First-Tier Supplier Audits (Previous Year) + First-Tier Supplier Audits (Current Year)
- Cumulative Total Audits = First-Tier Supplier Audits + Second-Tier Supplier Audits + Cumulative Total Audits (Previous Year)
- The statistical period for each year is October 1 of the preceding year to September 30 of the current year, totaling 12 months.
Manufacturing Supplier Direct Employees and Cumulative Direct Employees Audited, 2018-2022
Manufacturing Supplier Employees and Cumulative Direct Employees Interviewed and Audited,2018-2022
2022 Audit Results Analysis
From on-site audit results, we see that the greatest proportion of non-compliance occurred in labor issues, followed (in order) by health & safety, environmental, management system, and ethics.
Distribution of Non-Compliance Found in Audits
Significant Deficiencies (defined as Priority Non-Conformances) and Other Deficiencies
RBA Code of Conduct Conformance
* Data covers all suppliers subject to audits by Acer management, third parties, and VAP, a total of 98.
Important Issues and Tracking of Improvements in 2022
The main lapses in terms of labor rights were problems around working hours and pay. Other issues were related to lapses in control of hazardous substances, potential hazard controls, and Supplier audit management.
Although overtime and a small number of personnel working long shifts are still the main deficiencies, in the post-epidemic era, production and scheduling have normalized due to abundant raw material inventory and slowing market demand, so the demand for emergency manpower has decreased significantly,which has led to a significant alleviation and improvement of the overtime problem. In response to future manpower changes, the supplier continues to pursue strategies such as process automation, duty scheduling optimization, multiskilled worker training and reward system to improve the flexibility of manpower scheduling in the long run.
Labor Wages and Benefits
The main problem is that social insurance coverage is not fully available to all employees. With strong communication and supervision, we have made significant improvements in 2022. At present, the main problem is that the insurance coverage of new employees still needs to be improved. Therefore, in response to the new changes, the implementation strategy is adjusted and the focus of the audit is changed to whether the new employees have proper insurance-related education and training to enhance their personal intelligence for the promotion of comprehensive insurance operations. In addition, although there are no outstanding cases of unpaid salaries in a small number of factories, the timeliness needs to be further improved due to the complicated and lengthy operation procedures. In addition to requesting suppliers to adjust and improve in a timely manner, it is also included as a key item in the continuous tracking and inspection.
Environmental Safety and Health
The main problem is that the fire-fighting facilities, escape doors, and signage in the factory were not thoroughly inspected and internally audited when they were re-opened after a period of discontinued production, resulting in some of the lights malfunctioning or being locked. To eliminate the potential for occupational hazards as much as possible, in addition to educating suppliers to include this in their implementation, we have placed special emphasis on this audit in 2022.
Hazardous Substance Management
the main issue is that the temporary storage area is not stringent in terms of chemical packaging, retrieval and labeling. Also, chemical liquids were not properly set up in secondary containers when stored so as to prevent the risk of leaks. Suppliers are required to include this operation as a daily internal inspection highlight.
In terms of management system, suppliers are more likely to be negligent in the management of non-direct production related services, such as manpower dispatch, canteen, cleaning and security, etc. We continue to promote this management highlight and include it in our counseling and tracking.
Corrective Action Reports (CAR)
Acer issues Corrective Action Reports (CAR) to higherrisk audited suppliers in response to any issues of noncompliance identified. Within 30 days of receiving such reports, suppliers must produce a written risk CAR of their own and submit it to Acer for approval by management personnel. These reports will be followed up on each month and verified against the on-site audit the following year. With regard to high-risk suppliers, as found in the audits, Acer will make the necessary adjustments to our purchasing strategy to manage the issue. As of the end of 2022, 210 deficiencies have been identified in higherrisk suppliers with VAP audit scores below 160 or priority non-conformance deficiencies, and as of December 31,2022, 210 deficiencies have been tracked and improvement measures have been implemented. A total of 15 deficiencies including priority non-conformances were listed, and all of them have been listed for corrective action, the implementation rate of which is 100%. The other nonconformances have also been listed for corrective action,the implementation rate of which is 100%.
Percentage of Priority Non-Conformance with Corrective Measures Implemented
Other Non-Conformances with Corrective Measures Implemented
Important Issues and Corrective Actions for On-site Audits