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Supply Chain Management System

Acer has been a member of the Responsible Business Alliance (RBA) since 2008, and actively participates in actions and discussions around supply chain social and environmental responsibility to better understand international trends in CSR and share in the practical experience of its members. Through the Acer Responsible Supply Chain Management (ARSM) mechanism, all Acer manufacturers and service providers are required to comply with both the RBA Code of Conduct and local regulations. In addition, we carry out annual on-site RBA Code of Conduct supplier audits, gaining a deeper understanding of each location' working environment and the human rights conditions of the staff. We encourage and require suppliers to uphold their corporate responsibility by ensuring and their suppliers implement socially and environmentally responsible management and advocate for RBA Code of Conduct adherence, thus improving the working environment in the electronics supply chain worldwide. 

Since 2016, Acer has required first-tier suppliers to implement risk assessment and management of second-tier suppliers based on the RBA Code of Conduct. For higher risk suppliers, we also carry out on-site audits and tracking of improvements. Additionally, we incorporate performance in this regard into our supplier CSR scorecard assessments, realizing and expanding our supply chain' environmental and social responsibility. We anticipate the scope of supply chain responsibility management to have expanded to third-tier suppliers by 2021.

 

We implement vendor CSR scorecard assessment in order to look at performance in CSR and with regard to the environmental, social, and governance aspects. We continue to communicate with suppliers and enhance their ability to respond to sustainability issues, as well as encouraging suppliers to incorporate sustainable development matters into their management agenda. In line with Acer' sustainable development strategy, we hold a variety of supplier sustainability conferences, and in our annual supplier CSR communication meetings, provide information on the latest in CSR developments and trends, as well as analyzing important supply chain matters and potential actions that we can take together. These meetings also provide an opportunity for two-way communication between Acer and suppliers, strengthening the supply chain' environmental and social responsibility and deepening our CSR-related cooperative relationships.

To ensure that Acer' suppliers clearly convey the RBA Code of Conduct to their own suppliers, and to ensure compliance with that same code in suppliers, from 2016 we require all tier one suppliers to conduct risk assessments of their suppliers. Where risk is found to be relatively high, our suppliers must also undertake review and tracking of improvement measures. We also continue to focus on managing overtime figures for our ODM suppliers and on ensuring all staff receive at least one day off every seven days. To this end, we undertook bimonthly tracking and monitoring, and should any deviations for the targets be found, we shall require the supplier affected to implement an effective solution.

Supplier Social and Environmental Management Processes

We have set out environmental and social management practices and guidelines for our suppliers, while also making use of our various communications channels to provide assistance to those suppliers in boosting their capabilities. We have adopted the RBA Code of Conduct as our standard, and in terms of management framework, we refer to the RBA Supplier Engagement Process and divide our suppliers’ social and environmental management process into four stages: Introduction, Assessment, Validation, and Continuing Improvement. New suppliers pass a social l and environmental responsibility risk assessment and sign an RBA Code of Conduct compliance statement before they become official suppliers.

Vendor CSR Scorecard

In 2013, we began implementing vendor CSR scorecard assessment in order to look at implementation of and performance in CSR. The results of this scorecard for critical suppliers were presented at the quarterly business review in early 2014, providing both Acer' own management and the senior management of suppliers with information that will drive improvement on both sides.

Overall, the average performance of suppliers on the CSR scorecard in 2018 was improved compared to 2017. Nearly 30% of suppliers achieved an “excellent” scoring, and nearly 59% of suppliers were at the “medium” level. However, approximately 11% of suppliers were determined to be in the range requiring improvement as soon as possible. We also use quarterly business reviews or individual meetings in order to demand underperforming suppliers implement appropriate actions to improve their CSR performance. This mechanism will continue in the future, and according to internal and external issues and past performance, we will make any necessary adjustments to weighting or items to be assessed.

Evaluation Items of Vendor CSR Scorecard

Note: Management Systems Certifications: ISO 9001, ISO 14001, OHSAS 18001/ISO 45001, SA 8000
 

On-site Audits

Acer' suppliers must treat their staff in a respectful manner, using environmentally responsible manufacturing processes and providing safe working conditions. We have adopted the latest version of the RBA Code of Conduct, which covers the five major aspects of labor, health and safety, the environment, ethics, and management systems.

This system is used in our on-site audits of suppliers with regard to both social and environmental responsibility. Through different auditing methods adopted based on the particular nature of the supplier' operations and their implementation of the RBA Code of Conduct, we can verify any lapses we may find in the aforementioned five areas and require suppliers take corrective steps by a given deadline. Thus we are able to continually improve the social and environmental responsibility of Acer' supply chain.

On-site Document Review and Technical Exchange
New Employees Must Receive Training and Education in RBA-relevant Issues and be Tested before Commencing Employment

2018 On-Site Audit Results

Acer uses risk assessment results as the basis for on-site audits and assessments. We examine the country risk, manufacturing processes, and products of each supplier, along with results of previous audits, as well as taking into account the concerns of stakeholders when setting out our annual audit plan.

In 2018, we conducted on-site audits of 105 supplier plants, including six new suppliers, resulting in on-site audits of 100% of new suppliers. Our auditing methods include audits by Acer supplier management, audits by third parties, RBA Validated Audit Process (VAP) audits, and evaluation reviews. We particularly encourage suppliers to undergo the RBA VAP themselves, resulting in a broader scope of application of audit results that can help boost overall industry responsibility and compliance. In 2018, the audited suppliers had more than 250,000 direct employees, 3,341 of whom were interviewed. More than 60% of audits employed the RBA VAP. Between 2008 and 2018, a cumulative total of 598 supplier audits have been carried out. In addition, Acer' first-tier suppliers also conduct risk assessments of the next tier of materials suppliers for potential audits. After the results were summarized, high-risk suppliers accounted for 14% of the total, and medium-low risk the remaining 86%. In adherence to this policy, a total of 709 audits were conducted in 2018. In 2019, we expect to conduct on-site audits of 90 supplier manufacturing plants, covering 200,000 direct employees and interviewing 1,800 employees.

2018 Audit Results Analysis

From on-site audit results, we see that the greatest proportion of non-compliance occurred in labor issues, followed (in order) by health & safety, management systems, environmental issues, and ethics. In 2019, our RBA on-site audit compliance goals are: labor: 85%, health and safety: 86%, environment: 92%, ethics: 95%, management systems: 90%.

Unannounced Audits

Suppliers found to have concerns regarding child labor, falsification of records, discrimination issues, high levels of Priority non-conformance, or low audit scores will be listed as potential subjects of unannounced audits. Suppliers are notified of an upcoming unannounced audit 12 hours prior to the audit taking place and are not notified of the content of said audit. In 2018, two suppliers with lower audit scores and higher risk in the previous year were subject to unannounced audits, with Acer more strenuously demanding they review practical action and take stronger measures to carry out their social and environmental management responsibilities.

In this year' unannounced audits, executive management discussions were conducted using the results of the audits to share information on industry trends and offer guidance on how to improve. Through continual monitoring of improvement progress, initial results have been accomplished. Based on this experience, in the future Acer will, when having relevant management undertake on-site audits, also attempt to provide continual guidance on avenues for improvement, thus reducing exploratory periods and accelerating the accomplishment of indicators both up- and downstream in the supply chain.

Important Issues and Tracking of Improvement in 2018

The main lapses in terms of labor rights were: some problems around working hours, wages, and benefits, with a few others relating to supplier management, occupational safety, and emergency assistance.

In terms of working hours, the main problems were around overtime or insufficient days off. In addition to ongoing bimonthly monitoring of work attendance at critical suppliers, we are also actively pushing for the implementation of attendance management systems supplemented by the implementation of timely review and control mechanisms. Secondly, with regard to the cost of health examinations and work clothes for new hires, most manufacturers have adjusted their recruitment costs, with related expenses borne by the recruiting units. Through the joint efforts of Acer and the relevant suppliers, these methods have already begun to result in concrete improvements.

There are still some omissions in the management of upstream suppliers by our first-tier suppliers, with some manufacturers still having yet to effectively standardize their risk assessment and effective coverage. In addition, efforts on the part of management to implement improvements and prevent against recurrence of problem points post-audit are still insufficient. As such, we have pressed for suppliers to strengthen their management procedures a key audit item and requirement for 2018, and will continue audits of high-risk plants. In 2018, a total of 709 audits of second-tier suppliers were carried out, double those of the previous year. We will continue to expand the scope of our influence and strengthen the consensus on the management of labor and working environments in our supply chain.

  • > Labor
    Freely Chosen Employment A1.1
    Main Issue
    Medical examination and work clothes costs are paid by job-seekers upon commencement of work
    Corrective Action  
    ‧ Expenses associated with taking up work, including work clothes, boots, and so on, will be paid by the Company;
    ‧ Health checks ahead of commencement of work will be adjusted and rationalized, with relevant fees shouldered by the employing unit.

    Working Hours A3.1-A3.2
    Main Issue
    Workweek exceeded 60 hours; workers were not allowed at least one day off in seven days
    Corrective Action 
    ‧ Introduce attendance management system, supplemented by pre-declared review operations. Strengthen the promptness and effectiveness of controls on overtime and attendance;
    ‧ Continue to optimize the ratio of temporary, social, and student workers;
    ‧ Take inventory of and rationalize manpower requirements by function;
    ‧ Carry out training of managers to strengthen awareness of labor rights.
  • > Health and Safety
    Occupational Safety B1.3
    Main Issue
    Lapses in exposure to safety hazards and safety protection
    Corrective Action  
    ‧ Set out guidelines and provide relevant training to staff working in positions with occupational safety risks before and during their employment;
    ‧ Develop standards for usage and verification of protective equipment;
    ‧ Post standards for wearing of personal protective equipment on Equipment and at work stations;
    ‧ List checking of such equipment in inspection list for management unit.

    Emergency Preparedness B2.4
    Main Issue
    Failure to maintain evacuation instructions and keep routes clear
    Corrective Action 
    ‧ In management procedures, when changing site spacing and layout, evacuation routes, signage, and lighting must be reviewed;
    ‧ Nighttime escape drills are to be added and dormitories included in the affected area;
    ‧ Blocking/closing of emergency exits is strictly forbidden.
    ‧ Clear signage is to be added to the floors.

    Machine Safeguarding B6.2
    Main Issue
    Insufficient equipment safety signs or protective equipment
    Corrective Action 
    ‧ Check equipment and define risk items, then list risk factors and post Safety signs accordingly;
    ‧ Introduce an equipment risk checklist, with testing requirements listed for all newly purchased equipment;
    ‧ Equip protective equipment with error-proofing and emergency shutoff functionality;
    ‧ Regularly check the functionality of equipment safety facilities.
  • > Management Systems
    Supplier Responsibility E12.2
    Main Issue
    Have not ensured suppliers have implemented RBA Code.
    Corrective Action 
    ‧ Take inventory of major suppliers and carry out risk assessments. Accordingly, list out audit items;
    ‧ Continually improve procedure manual, supplement corrective tracking and prevention processes;
    ‧ Expand management scope to include temporary and outsourced labor coordination and training provision.
 

Improving Supplier Capabilities

Acer offers information and training regarding the latest trends and developments in social and environmental responsibility, thus helping improve their ability to confront the challenge of sustainable development. We continue to invite suppliers to participate in annual supplier CSR communication meetings, CDP project briefings, and major training programs on social and environmental responsibility. This helps them get access to the latest information on global trends, while also presenting opportunities for suppliers to engage in multidirectional communication with Acer senior management or relevant industry experts. In 2018 we focused on real-world cases of circular economy and how we can improve our supply chain' ability to stay current with international trends.
 

 

RBA Taipei Outreach Meeting

Acer was active in working for the smooth holding of the 2018 RBA Taipei Outreach Meeting, including inviting suppliers to take part. The main focuses of the meeting were not only sharing information on developments relating to the RBA and related advocacy efforts, but also issues around migrant labor in Taiwan, with members sharing with suppliers their best practices.

2018 Supplier CSR Communication Meeting

Every year, Acer invites representatives of our major suppliers to participate in annual CSR Communication Meetings, sharing the latest global trends in corporate sustainability, human rights issues, and mitigation measures, emphasizing Acer' requirements of and goals for supply chain CSR management performance. In 2018, focusing on circular economy, we specially invited the plastics recyclers in our supply chain to share their practical operations and experiences to enhance the overall supply chain' awareness of the topic and its gradual implementation in Acer' circular economy goal.

2018 CDP Conference

Since 2008, Acer has been a consistent supporter and promoter of the Carbon Disclosure Project (CDP) in Taiwan. In addition to continuing to promote the CDP' annual briefings, in April 2018, CDP UK headquarters representatives were invited, along with Taiwan' top-performing companies, to discuss Science-Based Targets (SBT) and the Task Force on Climate-related Financial Disclosures’ Use of Scenario Analysis and Recommendations for Climate Risk Management. The aim of this was to help Taiwanese industry meet the expectations of international investors and customers in terms of climate and carbon management.