Sustainable Supply Chain

  • 집 아이콘

Implementation and Management System

Sanil Electric operates a sustainable supply chain management system centered on the Board of Directors and the ESG Committee to systematically manage ESG risks across its supply chain. The responsible department works closely with relevant functions, including Procurement, Quality, and R&D, to manage key supply chain issues.

Sustainable Supply Chain Governance Structure

Board of Directors
ESG Committee
  • The highest decision-making body, which deliberates on and approves supply chain strategy, mid- to long-term targets, and performance outcomes, while exercising oversight of all related matters.
CEO
  • Final authority for supply chain risk management; granting final approval on response plans and results for identified major risks
  • Ensuring effective execution by providing full support in human resources and assets for policy implementation.
Dedicated Sustainable Supply Chain Department
  • Department with overall responsibility for supplier risk identification and due diligence.
  • Immediate reporting to the ESG Committee upon occurrence of material issues; oversight of supplier selection and contracting.
  • Procurement Strategy Department
  • Quality Management Department
  • Development Department
  • Other Relevant Departments
  • Procurement Strategy Department: Supplier contract management and procurement risk review.
  • Quality Management Department: Supplier evaluation and quality verification.
  • Development Department: Technical conformity assessment.
  • Other Relevant Departments: Section-specific indicator monitoring and information sharing.

Sustainable Supply Chain Policy

Sanil Electric has established and implemented a Sustainable Supply Chain Policy to promote mutual growth and shared development with its suppliers. Based on key ESG principles, including environment, human rights, occupational health and safety, and ethics, the Company operates a Supplier Code of Conduct and a Conflict Minerals Management Policy to build a responsible and sustainable supply chain.

Sustainable Supply Chain Policy

Category Details
Policy Purpose
  • Preemptive identification and prevention of ESG risks across the supply chain and value chain
  • Fostering a sustainable business ecosystem through win-win cooperation and shared growth with suppliers
Scope of Application
  • All domestic and overseas operational sites of Sanil Electric and all suppliers, including partner companies and joint ventures
  • Recommending compliance and demanding risk improvements not only from Tier 1 suppliers but also from lower-tier suppliers (Tier 2 and beyond)
Key Management Areas
  • Environment: Greenhouse gas emissions management, energy efficiency improvement, and expansion of waste recycling
  • Social: Prohibition of forced and child labor, non-discrimination, and establishment of OHS management systems
  • Governance: Practice of anti-corruption and ethical management, protection of intellectual property rights, and compliance with fair trade principles
Governance
  • Decision-making: The ESG Committee under the Board of Directors deliberates on and approves supply chain strategy and performance outcomes
  • Execution: The Dedicated Sustainable Supply Chain Department oversees and manages risk identification and due diligence tasks
Evaluation and Improvement
  • Three-step evaluation process: Self-Assessment (Stage 1) → Desk Review (Stage 2) → On-site Due Diligence (Stage 3)
  • Upon identifying deficiencies, training and consulting are provided; transaction suspension is reviewed for suppliers that fail to demonstrate improvement

Conflict Minerals Management System

Sustainable Supply Chain Policy
Category Details
Policy Purpose
  • Restricting the use of conflict minerals linked to human rights violations and environmental destruction in conflict-affected areas
  • Ensuring procurement in compliance with the OECD Due Diligence Guidance for Responsible Business Conduct
Managed Minerals
  • The four major conflict minerals (3TG): Tungsten, Tin, Tantalum, and Gold.4
  • Progressively expanding the management scope to include other high-risk minerals, such as cobalt
Supplier Obligations
  • Securing Transparency: Submission of supporting documentation regarding mineral mining and distribution processes (CMRT, etc.)
  • Sub-tier Management: Periodically updating information on smelters and refiners within their own supply chains
Supply Chain Due Diligence
  • Conducting regular reviews of mineral usage status submitted by suppliers, alongside on-site inspections
  • Demanding supply chain changes and corrective actions when uncertified smelters are identified
Actions for Non-compliance
  • Restricting transactions if a supplier refuses to provide information without justifiable reasons or violates the policy
  • Reviewing purchasing suspension until an improvement plan for identified risks is established and implementation is verified

Supplier Code of Conduct

Sanil Electric operates a Supplier Code of Conduct that sets ESG standards for suppliers across human rights and labor, occupational health and safety, environment, and ethics. Based on these standards, the Company promotes responsible management practices throughout its supply chain and works to build a sustainable supply chain.

Key Content of the Supplier Code of Conduct

Supplier Code of Conduct
Category Details
Human Rights and Labor
  • Voluntary Labor: Prohibition of all forms of forced labor, including slavery and human trafficking
  • Child Labor: Strictly prohibited in compliance with the minimum legal employment age of each country
  • Working Conditions: Compliance with statutory working hours, guarantee of fminimum wage, and provision of legally mandated holidays
Safety and Health
  • Hazard Factor Management: Minimizing employee exposure to hazardous factors within the workplace and ensuring distribution of appropriate safety equipment
  • Emergency Preparedness: Establishing fire and disaster response manuals and conducting regular response drills and training
  • Sanitation and Housing: Providing hygienic drinking water and dining facilities, and ensuring a safe, comfortable dormitory environment
Environmental Protection
  • Permit Acquisition: Acquiring and maintaining all environmental permits and licenses required for business operations
  • Hazardous Substance Management: Establishing safety management systems across the entire lifecycle of chemical substances, from procurement through to disposal
  • Scope 3 Management: Measuring energy consumption and greenhouse gas emissions, and implementing efforts to reduce them
Ethics and Fair Trade
  • Anti-Corruption: Applying a 'Zero Tolerance' policy against bribery, embezzlement, and illicit solicitation
  • Information Security: Thoroughly protecting the trade secrets and personal information of Sanil Electric and its clients
  • Responsible Procurement: Rigorously managing and verifying whether conflict minerals are incorporated in products
Management System
  • Operational Accountability: Mandating the appointment of senio management representatives to implement and review ESG objectives
  • Due Diligence Cooperation: Obligation to actively cooperate in on-site due diligence conducted by Sanil Electric or third-party audit organizations

Supply Chain ESG Evaluation

Sanil Electric evaluates raw material and in-house service suppliers based on key criteria, including quality and technical capabilities and environmental, health, and safety (EHS) performance, before registering them as approved suppliers. Following registration, the Company conducts regular performance evaluations and re-evaluations to continuously monitor suppliers’ quality and ESG management performance.

Supply Chain Evaluation Process

  1. 1. Supplier Information Gathering

    Researching the prospective supplier prior to contracting to obtain relevant company information.

  2. 2. Desk Review

    Evaluating the supplier's production or supply performance and EHS system and management capabilities based on available supplier information, using a standardized desktop evaluation form.

  3. 3. On-site Due Diligence

    Selecting target companies requiring due diligence, establishing a due diligence plan, and assembling a due diligence team inclusive of qualified auditors.

    Conducting due diligence across quality, technology, and EHS categories separately, and preparing a comprehensive due diligence evaluation report.

  4. 4. Evaluation Result Notification and Approved Supplier Registration

    Comprehensively reviewing desktop evaluation forms or due diligence reports to determine whether to register the company as an approved supplier, and registering and managing only qualifying companies on the approved supplier list.

  5. 5. Approved Supplier Performance Evaluation and Management

    Evaluating the performance of approved suppliers when an audit is deemed necessary.

    Suppliers that fall short of established standards are placed under special management, corrective actions are taken for identified nonconformities, and follow-up measures are implemented after re-evaluation if material issues are identified

  6. 6. Re-evaluation and Re-registration of Approved Suppliers

    For approved suppliers whose registration validity period is approaching expiration, a re-evaluation is conducted in the same manner as the initial evaluation to determine whether to extend the validity period.

    Suppliers meeting excellent performance criteria are automatically extended prior to expiration, while a re-evaluation is conducted for suppliers with significant changes in status.

Supply Chain Evaluation Methods

Evaluation Method Target Suppliers Evaluation Criteria
Desk Review
Evaluation of supply performance for identical or similar items or services. Applicable to all suppliers with a performance record of two years or more. Performance of 2 years or more
Desktop evaluation of quality records. Applicable to companies requiring a quality management system; assessed on quality system suitability and audit status. Suitability of the quality system and audit status
Environment/Health and Safety Applicable to companies requiring an EHS management system; assessed through an EHS Self-Assessment. EHS Self-Assessment
Testing
Sample testing of supplied items. Applicable to companies requiring performance verification of items; assessed based on test results. Test results
Due Diligence
Evaluation of equipment, personnel, technology, and quality execution capabilities.

1. Target Suppliers:

  1. Suppliers of nuclear safety-related items
  2. Companies requiring on-site verification based on desktop evaluation results, considering scope, characteristics, quality significance, and process complexity
  3. Nuclear CGI1) items requiring due diligence.
 60% or higher (80% or higher for nuclear)

1) CGI (Commercial Grade Item): Items not originally designed or manufactured exclusively for nuclear use, but determined applicable to safety-related systems through appropriate nuclear quality assurance (CGI dedication) procedures.

Supply Chain Due Diligence

Sanil Electric conducts on-site due diligence on key suppliers to comprehensively assess their technical and quality capabilities and environmental, health, and safety (EHS) management. The results are used to evaluate suppliers’ supply stability and ESG readiness and are reflected in approved supplier registration and ongoing management.

Strengthening Supplier Communication

Sanil Electric operates reporting and grievance channels to facilitate effective communication with suppliers and shares ESG policies and relevant information through regular meetings and training programs. The Company also provides various training programs to support suppliers in strengthening their professional capabilities.

Supplier Communication Methods

Ethics Hotline
Grievance Handling & Whistleblowing
  • Operating an 'Cyber Sinmungo(Ethics Hotline)' for anonymous reporting of unfair practices or ESG violations.
  • Ensuring strict confidentiality and strictly prohibiting retaliation against whistleblowers.
Information Sharing & Training
  • Sharing ESG policies and global regulatory trends through regular meetings and training programs.
  • Supporting suppliers' professional capabilities through FTA origin management training.
Shared Growth Culture
  • Prohibiting unfair demands based on superior bargaining positions through the Ethical Management.
  • Maintaining fair and transparent transactions to foster mutually beneficial long-term partnerships.

Establishment of Painting Specifications and Standardization Innovation Committee

Sanil Electric operates the Painting Specifications and Standardization Innovation Committee in collaboration with paint suppliers and other suppliers to improve coating quality and the long-term reliability of its distribution transformers. The Committee reviews painting processes across the supply chain and works to strengthen quality competitiveness together with suppliers by standardizing technical standards and work procedures.

Supply chain management

Sanil Electric continuously monitors key supply chain metrics, including the number of suppliers and procurement volume, to maintain a stable supply chain and manage related risks. As the business expands, both the number of suppliers and procurement volume are increasing, and the Company continues to strengthen its quality and supply risk management system, with a focus on critical suppliers.