FENC is a vertically integrated conglomerate that spans across the petrochemical, polyester and textile industries with vast and complex procurement handlings. The selection, management and procurement of suppliers as well as ESG impact assessment are conducted by the FEG Purchasing Center as well as the procurement departments and procurement units responsible for purchasing primary raw materials at all FENC sites.

Beginning in 2016, FENC has been filing the total green procurement from the previous year with the government. As of the end of 2023, over NT$15.7 billion of green procurement has been made by the FEG Purchasing Center. The FEG Purchasing Center has been recognized as the benchmark unit for green procurement among private enterprises and organizations by the Department of Environmental Protection of Taipei City Government for a total of 6 years.

Management Policy

FENC establishes supplier management rules that respect local regulations and production needs at each Company site. The management is guided by the principles listed below:

1. Supplier Code of Conduct and Corporate Social Responsibility Commitment Statement

To collaborate with suppliers on our mission to accomplish sustainability development goals, FENC refers “Responsible Business Alliance Code of Conduct” to establish “Supplier Code of Conduct and Corporate Social Responsibility Commitment Statement” and requests suppliers signing. The mandate is implemented in stages and includes supplier, distribution and logistics and other key business partner (outsourcing partner).

⇒ Supplier Code of Conduct and Corporate Social Responsibility

The Number and Purchase Amount Percentage of Suppliers Signing “Supplier Code of Conduct and Corporate Social Responsibility Commitment Statement”

Note:
1. The percentage of suppliers signing “Supplier Code of Conduct and Corporate Social Responsibility Commitment Statement” = the number of suppliers signing “Code of Conduct and Corporate Social Responsibility Commitment Statement” ÷ total number of suppliers x 100%.
2. The total number of suppliers varies from year to year.
3. The number of suppliers signing “Supplier Code of Conduct and Corporate Social Responsibility Commitment Statement” of OPTC is 98%.
4. Since 2021, targets include Suppliers that work with the procurement units of FIGP and APG Polytech.

 

2. ESG-Based Supplier Selection and Evaluation

• Selection process
  
  Additional criteria are established for different types of procurement projects, and all applicable clauses are stated in the contract to ensure compliance. 
  
  Procurement units conduct written or on-site evaluation on new suppliers and classify them based on selection criteria. Each year, the procurement units evaluate the major suppliers with end-users. The results serve as references for contract renewal in the coming year. There are 1,249 new suppliers in 2023, and 1,169 (94%) of which have been evaluated.
  
  At FENC sites in Vietnam, an ESG checklist is incorporated into the supplier selection segment of the procurement process. Suppliers are required to implement measures regarding carbon reduction; GHG management; waste management; recycling and reuse; no forced labor; occupational health and safety; reasonable working hours and welfare; diversity and equality; anti-discrimination. Third-party verification are also required to verify suppliers’ ESG performance. Those unable to meet the requirements are considered high-risk suppliers and removed from the list of candidates. At FENC sites in Japan, assessments on the management of labor safety and health are conducted during supplier selection.
  
   
• Regular evaluation
  
  At the beginning of each year, major suppliers from the previous year are evaluated, and the results serve as a reference for awarding procurement contracts for the current year. Suppliers that do not qualify are placed on a watchlist and provided with improvement recommendations, and those that are unable to improve are removed from the list of candidates. To help suppliers with unsatisfactory evaluation improve, FEAV provides product samples or opportunities for plant visits and observation.
  
  In 2023, the FEG Purchasing Center invited six significant suppliers to complete the self-assessment questionnaire on occupational health and safety sustainability from OSHA. The questionnaire gives suppliers an assessment of the current status on occupational safety and health management. It also gives FENC an understanding of the progress that suppliers are making and serves as a basis for further improvements.
  
  The following table is a compilation of all suppliers assessment by the procurement units. Evaluated categories include environment, labor, human rights and society. When the evaluation indicates major impacts were made, the Company may provide suppliers with assistance for improvements or terminate the contract depending on the severity. The result identifies two suppliers as posing negative impacts under the “labor practice” category, both of which are in violation of FENC's occupational safety and health regulations. One demonstrated dramatic improvement after receiving coaching, and the partnership continues. However, the second supplier failed to improve. After evaluating the situation, FENC has ended the partnership.
   

Supplier Assessment Aspects and Number of Suppliers in 2023

Note: Environmental evaluation includes pollution prevention, waste treatment, energy and resource consumption, chemical use management as well as GHG emission; labor practice evaluation includes occupational safety, equality and training; human rights evaluation includes child labor, forced labor and rights of the indigenous people; social evaluation includes corruption, monopoly and fraud.

FEPV requires wood pellet suppliers to provide the forest management certification from the Forest Stewardship Council (FSC), ensuring that the wood pellets are sourced from FSC-certified forests or recycled materials to avoid over-development of the forest resources and fulfill its commitment to non-deforestation.

3. Priority Status for Local Suppliers

FENC gives priority consideration to local suppliers when it comes to procurement. Such policy promotes local economic development and allows the Company to provide better after sales service. APG Polytech is located in the state of West Virginia in the U.S. The inland position makes the railway its main mode of transportation. Therefore, APG Polytech gives priority status to suppliers within close proximity, which cuts delivery time as well as carbon emissions.

Percentage of Procurement from Local Suppliers in 2023

Note:
1. Local supplier is defined as a domestic supplier. In Taiwan, mainland China and Vietnam, local suppliers are unable to provide certain main raw materials.
2. Percentage of purchase from local suppliers = Purchase amount from local suppliers ÷ total purchase amount x 100%.
3. Main raw materials included in the 2020-2022 statistics are PX, PTA, MEG, Bio-MEG and cotton, including recycled cotton. Starting from 2023, the main raw materials don’t include cotton (including recycled cotton).

 

Supplier Engagement

FENC engages in dialogues with suppliers through various channels in order to monitor supplier operation.
 

1. The Company provides a mailbox for supplier feedback on its website. Grievance channel and procedure please refer to 2023 Sustainability Report “Contact and Grievance Channel”.
2. The Company monitors the suppliers and contractors monthly and conducts dialogue meetings. The FEG Purchasing Center visited 335 suppliers in 2023.
3. The Company holds quarterly supplier meetings to conduct exchange and recognize suppliers for their excellence.
4. The Company holds ad hoc technology exchange meetings with suppliers.
5. Partner with suppliers on mutually benefitting projects.