Supplier Sustainable Management
|
Novatek has formulated a sustainable management strategy for suppliers, incorporated ESG into the risk assessment of supplier management and procurement processes, and conducted supplier evaluations on a regular basis; in response to the United Nations Sustainable Development Goals, Novatek continues to pay attention to issues such as energy conservation, carbon reduction, environmental protection, and pollution prevention, exerting the influence of responsible supply chain.
In order to create a green and sustainable environment, Novatek held its first " Supply Chain Sustainability Forum" in 2022, and jointly formulated operational goals with the supply chain. This event brought together important domestic and overseas suppliers from Novatek’s supply chain, including wafer fabrication, packaging and testing. This year, the discussion was focused on climate change issues. Suppliers, experts and scholars were invited to share international trends in carbon reduction and achievements in waste reduction as well as the promotion of the circular economy. We hope to deepen supply chain competitiveness through this forum and work together with suppliers towards the ultimate goal of net-zero emissions and sustainable operations. |
Supplier Sustainable Management Strategy
Mutual Benefits of Partners
|
Novatek Microelectronics dedicates great efforts into having a positive cycle of IC design and supply chain manufacturing, and apart from establishing cooperative relationships with suppliers to jointly produce high-quality and high-value products, we also pay attention to environmental protection and take into account the rights and interests of all workers. With respect to the sustainable management of the supply chain, the Company has adopted the four strategies of 'Following Procedural Standards', 'Risk Assessment', 'Monitoring and Auditing' and 'Continuous Improvement'. We exhort our suppliers to put their efforts into a business model of social responsibility, to continuously improve and be courageous in commitments, working with dedication towards sustainable development. |
|
|
|
Novatek Supplier Management Mechanism |
|
Supplier Code of Conduct
Novatek Supplier Code of Conduct
|
Those wishing to become the suppliers of Novatek must pass the Company’s new supplier assessment procedure, which includes the audit of production capabilities, the audit of operating systems and the audit of quality systems, ensuring that the capabilities, reliability and quality of new suppliers meet the requirements of the Company and customers. Apart from the above considerations, Novatek also pays attention to international sustainable development issues and believes that suppliers need to have a certain system to fulfill corporate social responsibility. Therefore, in 2022, Novatek used the "Responsible Business Alliance (RBA) Code of Conduct" as its basis for formulating the "Novatek Supplier Code of Conduct" and required suppliers to comply with and sign it. In addition, newly onboarded suppliers must also sign the Supplier Code of Conduct to ensure they understand and agree to comply before they qualify for cooperation. As of 2023, all Novatek suppliers signed the Supplier Code of Conduct, including three new suppliers, achieving a signing rate of 100%Note. Moreover, all suppliers have passed the evaluation to obtain ISO 14001 certification.
|
 |
Supplier sustainable management performance
|
To grasp the sustainable development of Novatek’s supply chain, annual surveys and evaluations on major suppliers will be conducted through risk assessments. This will help Novatek identify suppliers with high risks in the economic, social and environmental aspects, and suppliers with potentially high risks will be requested to carry out improvements within a time limit. If the situation is serious, on-site audit and expert consultation will be arranged to provide guidance, ensuring that the risks can be effectively controlled to comply with the management policy of Novatek for sustainable operation. |
|
Risk assessment 1: ESG management system risk assessment |
|
Novatek confirms the establishment of supplier management system through the three major dimensions of economy, society and environment, evaluating the risks that the suppliers may face in carrying out sustainable development, so that appropriate countermeasures can be adopted. After the suppliers have obtained ESG system certification, they will be assessed based on the weighting and classified into three risk levels: low, medium and high. Suppliers with low risks (≧60%) will be selected as the candidate for priority procurement. On the contrary, for suppliers with high risks (≧30%), Novatek will provide guidance or assistance through arranging on-site audits or expert consultation. If the target is still not achieved, the procurement will be reduced or terminated. Assessment of supplier ESG management system is divided into three dimensions with a total of 100%. In 2023, the results of the ESG management system assessment for suppliers were in compliance with the low-risk supplier standard (≧60%), and there were no economic, social and environmental risks. In the future, the status of the suppliers in obtaining ESG system certification will be continuously monitored to ensure that the process can meet ESG management standards.
|
|
Risk assessment 2: Self-assessment questionnaire for sustainability management (RBA risk self-assessment) |
|
To gain a deeper understanding of the supplier situation, Novatek not only adheres to the “Responsible Business Alliance (RBA) Code of Conduct” but also actively implements RBA-related management systems and training programs within the Company. Additionally, Novatek requires its supply chain partners to conduct the "Self-assessment Questionnaire for Sustainability Management" covering five major areas: labor rights protection, occupational safety, environmental protection, compliance with ethical requirements, and management systems. This process helps Novatek identify supplier adherence to the “Responsible Business Alliance (RBA) Code of Conduct” and assesses sustainability risks. In 2023, a total of 44 suppliers responded to the sustainability management questionnaire, representing a response rate of 100%, and the suppliers’ scores on the “Self-assessment Questionnaire for Sustainability Management” were all above 93 points. In addition to the self-assessment scores, Novatek also reviewed the suppliers’ responses. If the responses to individual items were incomplete or if documents required additional supporting evidence, the suppliers were requested to provide explanations during regular meetings with Novatek so both parties could grasp the risks of suppliers. A total of 9 suppliers have accepted the RBA-verified audit process (VAP) and have corrected the deficiencies during the audit process.
|
 |
|
Supplier Monitoring and Audit |
|
Novatek, with a sustainable management mindset, has selected 9 companies to serve as its key suppliers Note. The Supply Chain Management Department and ESG Sustainability Committee conduct social responsibility audits of key suppliers through document review and on-site methods, including the auditing items of the Responsible Business Alliance (RBA) Code of Conduct. In 2023, Novatek completed social responsibility audits for 8 key suppliers, achieving an audit completion rate of 89%, surpassing the set target of 65%. The improvement items for the audits will continue to be communicated to the supply chain and used for guidance. In addition to social responsibility audits, Novatek also communicate sustainable management goals and reviews the sustainability performance of suppliers (including energy-saving and carbon reduction measures and performance in renewable energy) through regular meetings. This strengthens the resilience of the supply chain in terms of sustainable management.
|
 |
Sustainable Supply Chain Management Forum
In 2022, Novatek held its first "Sustainable Supply Chain Management Forum", which was conducted virtually due to the COVID-19 pandemic. This event brought together important representatives from our supply chain partners, including wafer manufacturing, packaging, and testing companies from home and abroad. This year's theme was climate change, and experts of suppliers were invited to share global carbon reduction trends, waste reduction, and circular economy achievements. Through this forum, Novatek expressed sincere gratitude to our supplier partners and presented the ESG Excellent Supply Chain Award to recognize suppliers' efforts in sustainable action. We also communicated the requirements of the "Novatek Supplier Code of Conduct" and worked together with our supply chain to promote greenhouse gas inventory and green operation targets (annual electricity savings rate≧1% compared to the previous year; zero production downtime days due to water shortage). A total of 70 participants attended the forum, serving as the exchange and learning platform for supplier partners. In the future, we will continue to focus on energy conservation, carbon reduction, environmental protection, pollution prevention, and circular economy issues. We hope to deepen supply chain competitiveness through this forum and work together with suppliers towards the ultimate goal of net-zero emissions and sustainable operations, creating a green and sustainable environment.
Supplier Sustainability Risk Assessment
To gain a deeper understanding of the supplier situation, Novatek not only adheres to the “Responsible Business Alliance (RBA) Code of Conduct” but also actively implements RBA-related management systems and training programs within the Company. Additionally, Novatek requires its supply chain partners to conduct the "Self-assessment Questionnaire for Sustainability Management" covering five major areas: labor rights protection, occupational safety, environmental protection, compliance with ethical requirements, and management systems. This process helps Novatek identify supplier adherence to the “Responsible Business Alliance (RBA) Code of Conduct” and assesses sustainability risks. In 2023, a total of 44 suppliers responded to the sustainability management questionnaire, representing a response rate of 100%, and the suppliers’ scores on the “Self-assessment Questionnaire for Sustainability Management” were all above 93 points. In addition to the self-assessment scores, Novatek also reviewed the suppliers’ responses. If the responses to individual items were incomplete or if documents required additional supporting evidence, the suppliers were requested to provide explanations during regular meetings with Novatek so both parties could grasp the risks of suppliers. A total of 9 suppliers have accepted the RBA-verified audit process (VAP) and have corrected the deficiencies during the audit process.
Supplier Code of Conduct
Novatek pays attention to international sustainable development issues and believes that suppliers need to have a certain system to fulfill corporate social responsibility. Therefore, in 2022, based on the "Responsible Business Alliance Code of Conduct," Novatek formulated the "Novatek Supplier Code of Conduct" and required suppliers to comply with and sign it. In addition, new suppliers must also sign the Supplier Code of Conduct to ensure that they understand and agree to comply with it before they can qualify for cooperation. As of 2023, all Novatek suppliers signed the Supplier Code of Conduct, including three new suppliers, achieving a signing rate of 100%. Moreover, all suppliers have passed the evaluation to obtain ISO 14001 certification.
Responsible Minerals Management Performance
In 2023, Novatek surveyed a total of 29 suppliers related to manufacturing and packaging services. According to the survey results, 148 smelters have been identified, covering 28 countries. 100% of the suppliers adopted RMI (Responsible Minerals Initiative) approved smelters to provide products that meet the requirements.
Feedback of Customer Satisfaction
Novatek has established the “Customer Application Service Operating Procedure” to ensure that our customers are satisfied with the products and services provided by Novatek, and the internal activation and execution of opinions of customers. We review and evaluate customer satisfaction periodically in order to propose a responsive improvement plan for analysis and improvement based on the management cycle of P-D-C-A. Through participating in regular customer meetings (acquired by customer evaluation) or customer satisfaction surveys, and after comprehensive analysis, review and feedback of relevant improvement measures are proposed at the management review meeting. In 2023, customer satisfaction reached 96%, achieving the target of 90%. This shows that the Company has gained recognition from customers in terms of quality management and improvement.
