Mutual Benefits of Partners
Supplier sustainability management strategy
Novatek is committed to the positive cycle of IC design and supply chain manufacturing. In addition to establishing cooperative relations with suppliers to jointly produce high-quality and high-value products, it also pays attention to environmental protection and takes into account the rights and interests of all workers. For the sustainable management of the supply chain, Novatek adopts the four strategies of "following procedures", "risk assessment", "monitoring and auditing" and "continuous improvement" to help suppliers develop a socially responsible operation model, making continuous improvements and bold commitments to strive towards sustainable development.
Supplier Code of Conduct
As one of the leading companies in the electronics industry, Novatek pays close attention to international sustainable development issues, formulates a sustainability policy based on the "Responsible Business Alliance (RBA) Code of Conduct ", and requires its suppliers to abide by the code of conduct and sign the "Novatek Sustainability Policy Statement". New suppliers of Novatek must sign the "Novatek Sustainability Policy Statement" in order to be qualified for cooperation. This ensures that the suppliers understand Novatek's sustainability requirements and are committed to work together with Novatek to bring a positive impact on social development, creating sustainable green enterprises that protect the environment and labor rights.
Conﬂict mineral management
Conflict mineral refers to gold (Au), tantalum (Ta), tungsten (W), tin (Sn), and other specific minerals that may be regulated by the RBA (Responsible Business Alliance) in the future. They come from mining regions in the Democratic Republic of the Congo or neighboring countries controlled by non-governmental military groups or illegal military factions. The illegal mining profits obtained by these local military groups are stolen from citizens, causing human rights violations and environmental degradation.
Novatek supports the Responsible Business Alliance (RBA) and the Global e-Sustainability Initiative (GeSI)'s "Responsible Minerals Procurement" proposition. Based on the "Responsible Minerals Assurance Process" (RMAP), suppliers are required to only purchase non-conflict raw materials from suppliers who are responsible for the environment and society, and sign the "Conflict-Free Minerals Declaration". Every year, surveys are conducted through the Conflict Minerals Reporting Template (CMRT) to identify the source of minerals and information of smelters in the supply chain. In 2020, Novatek surveyed a total of 30 suppliers related to manufacturing and packaging services. According to the survey results, 141 smelters have been identified, covering 29 countries. 100% of the suppliers adopted RMI ( Responsible Minerals Initiative) approved smelters to provide products that meet Novatek's requirements.
In addition to paying attention to the 3TG conflict minerals, Novatek has followed the international trend and acted in concert with the RMI and customer requirements to list cobalt as the management target for responsible mineral procurement. In 2019, it began to conduct due diligence with suppliers and require smelters to disclose the source of cobalt. Since 2020, it has been providing smelter information to customers who are in need of cobalt survey.
Sustainability risk assessment
In order to grasp the sustainable development of Novatek's supply chain, we will conduct annual surveys and evaluations on our major suppliers through risk assessments. This will help us 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 evaluating the risks based on the ratio of system certification obtained from the supply chain with weighted factors, 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. In 2020, the results of the ESG management system assessment for suppliers were in compliance with the standard ( ≧ 60%), and there were no economic, social, and environmental risks.
Risk assessment 2: Self-assessment questionnaire for sustainability management
Since 2020, in order to gain insights into the current situation of suppliers, Novatek has not only followed the "Responsible Business Alliance (RBA) Code of Conduct", but also required its suppliers to take the "sustainability management self-assessment questionnaire", covering five major areas of labor rights protection, occupational safety, environmental protection, compliance with ethical requirements and management systems. The self assessments are used to identify the compliance with the "Responsible Business Alliance Code of Conduct" and evaluate its sustainability risks. In 2020, the supplier's feedback rate to the sustainability management questionnaire was 100%, and the suppliers' self-rated scores for the compliance with the "Responsible Business Alliance Code of Conduct" were all above 85 points. In addition to the self-rated scores, Novatek also reviewed the suppliers' responses. If there are incomplete responses to individual items or documents that require require additional supporting evidences, the suppliers are requested to provide explanations in regular meetings to grasp the risks of suppliers. Among them, 8 suppliers have accepted the RBA-verified audit process (VAP) and have corrected the deficiencies during the audit process. The boldness to make commitment for their own enterprises is Novatek's expectations for the suppliers. In the future, Novatek will continue to strengthen the resilience of the suppliers to reduce risks, working jointly towards the goal sustainable operations.