As such, the quality of products and performance of suppliers and contractors can have both positive and negative impacts on the Company. Moreover, management of relationships with suppliers and contractors is also essential to promote and build long-term growth together.
The Working Committee, consisting of the senior executives of the Company and its subsidiary companies, has the duty and responsibility in developing the procurement best practices in compliance with the international and ethical standards in order to set the procurement standards of AMATA Group, as well as, preparing and disseminating the Supplier Code of Conduct to communicate the intent of the Company in doing the business ethically with responsibility by taking economic, social and environmental impacts into consideration.
As well as a ESG risk assessment within the Company's supply chain. That covers all suppliers and contractors in good corporate governance, economy, society, and environment. Setting the management guidelines and strategies suitable for each group of suppliers and contractors and arranging for development and enhancement of suppliers and contractors' potential to reduce the sustainability risk and impact from business operations both in the short and long term.
The Company has announced the Supplier Code of Conduct and Procurement Manual of AMATA Group to its critical suppliers in accordance with sustainable supply chain management policy to promote the importance and to be a guideline for suppliers and contractors in doing business to comply with the Company's practice with an emphasis on social and environmental responsibility as well as honest, fair and transparent business practices covering the following issues:
In 2021, the Company has identified critical tier-1 suppliers from existing 932 tier-1 suppliers and contractors in its supply chain by using the following criteria:
In 2021, it was found that there were 71 critical tier-1 suppliers and contractors, accounting for 87% of the total procurement value. Among these, there were 6 suppliers in the real estate and rental business and 65 suppliers in the utility services business, representing the procurement value of 20 and 80 percent, respectively.
The Company has implemented a supplier ESG risk assessment for critical suppliers and all new suppliers through a self-assessment questionnaire (SAQ) that covers economic, social, and environmental dimensions. Suppliers with medium to high risk (self-assessment score less than 80%), the Company will make a site visit to perform an additional on-site ESG audit. Furthermore, the Company has assigned the Procurement Department and business units using the supplied products or services to conduct an annual supplier quality assessment but with a different frequency depending on the risk level. Critical and high-risk suppliers are required to present preventive and corrective measures, which will be assisted by the Company as a way to build a good relationship with suppliers.
The Company has set a target to assess all critical and new suppliers for ESG risk. In 2021, the Company conducted the ESG risk assessment of 71 critical suppliers and contractors (100%) and eight new suppliers (100%). There were no critical suppliers with high and critical environmental, social, governance, or economic risk.. The Company has determined risk management measures for individual critical suppliers, and also provided them some supplier development activities in order to reduce likelihood and impacts of such risks. However, the Company has not yet terminated business relationships with any suppliers and contractors that were assessed (0%). (Disclosure 308-2, 414-2)
Every supplier and contractor will be annually evaluated their performance and assessed their relationship by the Company. Critical suppliers that have passed a ESG risk assessment, covering economic, social, and environmental dimension, will receive an on-site ESG audit of which details and frequency depend on the risk level of individual suppliers as required by the Company and ISO14001 Standard. The supplier audit and evaluation can be performed by examination of reference documents, self-assessment questionnaire, and on-site audit by the Amata Group's procurement working team.
In 2021, the Company has set a target to conduct an on-site ESG audit of not less than 80% of the total number of critical suppliers. It was able to audit 56 suppliers, accounting for 80 percent of critical suppliers.
The new supplier selection process includes reviewing qualifications and past performance of suppliers and contractors to determine whether they meet the Company's requirements. All new suppliers are required to complete an ESG risk assessment using a self-assessment questionnaire prior to new supplier registration. If a passing score is achieved and no economic, social, and environmental risks are found, the new supplier will sign the Supplier Code of Conduct Acknowledgement and be registered as a new supplier. If a passing score is not achieved or there are risks, the supplier must develop and submit a preventive or corrective plan and implement it until the score is acceptable before it can register as a new supplier.
In 2021, the Company had eight new suppliers, all of which (100%) have successfully completed the selection process.
The Company has emphasized on the development of suppliers and contractors in its supply chain, especially critical suppliers of utility and industrial services, to reduce the social and environmental risks and impacts as well as compliance risks. It also encourages suppliers and contractors to improve their performance in line with the Company's standards. For example, it supports suppliers and contractors of critical products and services to develop business processes and obtain international management system certifications, such as ISO 9001, ISO 14001, ISO 17025, and OSHA 18000.