Supplier Social and Environmental Management Processes | ACER ESG
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
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.
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.
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.
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
Critical suppliers (critical suppliers)
We identify critical suppliers based on purchase spending; non-substitutability; strategic material, product, or business; and leading technologies. In 2023, Acer accounted for 88% of procurement expenditures for key tier 1 suppliers.
ESG high risk suppliers
Based on Acer's supplier social and environmental management process, we conduct supplier ESG risk assessment. The rating is based on Supplier Risk Assessment 1 and RBA Self-Assessment Questionnaire (SAQ), the score less than 85 for high-risk suppliers. ESG risks for Tier 2 suppliers are assessed by Tier 1 suppliers. The risks of smelters are based on the following principles: all suppliers use tantalum, tin, tungsten, gold and cobalt, whose source smelters must comply with the third-party evaluation mechanisms of OECD due diligence: including RMI Responsible Minerals Certification Process (RMAP), London Bullion Market Association (LBMA), Responsible Jewelry Council (RJC) Certified We further determine the risk of smelters through RMAP audits, RCOI data, and a list of sanctioned countries in the Office of Foreign Assets Control (OFAC). During the 2022 reporting cycle, Acer identified 29 smelters or refiners that fit this high-risk category and have directed that they are removed from Acer’s supply chain.
We define different importance screening principles based on different types of suppliers:
Tier 1 Suppliers: Critical suppliers or ESG high-risk suppliers are essential to Acer's business operations and sustainability, both are classified as Tier 1 significant suppliers. For tier 1 significant suppliers, we conduct an annual ESG scorecard assessment and on-site audits and review their corrective actions for non-conformance findings.
Tier 2 Suppliers: Suppliers with the dual attributes of critical and ESG high-risk suppliers. For Tier 2 significant suppliers, we require Tier-1 suppliers to conduct regular on-site audits and review their corrective actions for non-conformance findings. Acer will review and track them.
Smelters: Suppliers with the dual attributes of critical and ESG high-risk smelters. For significant smelters, we regularly examine the compliance of their OECD due diligence third-party assessment mechanisms and review their improvement actions.
In 2022, we screened out 23 Tier 1 significant suppliers, 139 Tier 2 significant suppliers, 0 significant smelters. Tier 1 and 2 significant suppliers are required to conduct on-site audits, take corrective actions (CAPs) for non-conformance findings, and include execution results in the supplier's quarterly business review meeting (QBR) for grading and reviewing.
In addition to audits of all key suppliers, to fulfill our supply chain management responsibilities, we have expanded the scope of audits, 105 audits for Tier 1 suppliers, and 893 Tier 2 suppliers.
In addition, we reward our suppliers with good performance. We also have countermeasures for underperforming suppliers, including:
Preferential business cooperation with suppliers with RBA Code of Conduct and ESG Scorecard (score 80 or above).
The RBA audit score less than 120 or ESG Scorecard Score less than 60 for ESG high-risk supplier, will be included in the supplier's annual improvement plan and discussed in the quarterly business meeting.
The Corporate Sustainability Committee and the Supply Chain Task Force will review the suppliers' annual improvement plan. Necessary measures, including order adjustments, project eligibility, or termination of cooperation, will be taken for suppliers who fail to make timely improvements.