Arcadyan has developed a comprehensive "Supplier Sustainability Investigation Criteria," covering four key management mechanisms: new supplier assessment, supplier management, supplier audits, and supplier guidance. These mechanisms assist suppliers in implementing ESG management practices to foster a green supply chain. Arcadyan has also established the "Arcadyan Sustainable Procurement Policy" and revised the "Supplier CSR Commitment" in 2023, aligning diverse inclusivity and anti-forced labor guidelines with international regulations and customer requirements. In 2023, a total of 325 suppliers signed commitments, achieving a 100% response rate.
Since 2021, Arcadyan has integrated environmental sustainability and social human rights clauses into supplier procurement contracts, requiring suppliers to fully comply with local environmental and social regulations as well as international standards. By 2023, signing compliance has exceeded 90%, showcasing Arcadyan's strong commitment to enhancing supply chain sustainability.
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New Supplier Evaluation
Arcadyan strengthens the construction of a sustainable supply chain to ensure that cooperation with suppliers complies with Arcadyan's Supplier Sustainability Investigation Criteria in economic, social, and environmental aspects. Therefore, a series of new supplier approval processes are implemented. In the "Supplier Assessment Form," suppliers are required to provide supporting documents. The evaluation includes quality, environment, engineering technology, and CSR aspects. In 2023, evaluations of 22 new suppliers were completed, with a 100% compliance rate. Additionally, candidate suppliers are required to sign the "Supplier Corporate Social Responsibility Commitment" to declare adherence to Arcadyan's Supplier Code of Conduct. Only those meeting the assessment score standards are included in the Qualified Vendor List (QVL).
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Supplier Sustainability Risk Assessment
Arcadyan has established a supplier sustainability risk assessment mechanism to identify potential risks in the supply chain. This involves investigating and evaluating suppliers across nine key areas, including corporate sustainability, human rights, environment, and business continuity. In 2023, there were no high-risk suppliers. Anti-corruption due diligence questionnaires were distributed to all 45 medium-risk suppliers, achieving a 100% completion rate for the 2023 assessment.
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Supplier CSR Audits
Arcadyan's overseas manufacturing centers have implemented a supplier CSR audit checklist based on the RBA Code of Conduct. The audit process for highrisk suppliers covers 11 key aspects, with "Environmental Management" and "Labor Rights" comprising 55% of the total evaluation weight, and the remaining nine aspects accounting for 45%. In 2023, 20 key suppliers from the medium-risk category were selected for on-site audits. Of these, 18 audits were completed, resulting in a 90% completion rate. Suppliers that did not complete the audits are currently undergoing relocation to Vietnam, and CSR on-site audits will be conducted post-relocation.
Arcadyan cooperates with customers' audit requirements and conducts audits on tier 2 suppliers of key suppliers. In 2023, Arcadyan audit and coach a tier 2 key supplier to ensure that its operation process complies with environmental, social and ethical standards. Arcadyan continue to expand corporate social responsibility audits to tier 2 manufacturers of key suppliers to improve the sustainable management of the supply chain.
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Supplier Guidance
Arcadyan continues to monitor and support suppliers in improving their Corporate Social Responsibility (CSR) practices. In 2023, its assisted 18 suppliers in addressing deficiencies in CSR related aspects, with the highest focus on "Health and Safety," "Environmental," and "Working Hours and Overtime," accounting for approximately 70% of the total audit discrepancies.In the aspect of environmental management, Arcadyan has established a dedicated Green Information Platform. This platform provides updated international green environmental procedures and announcements, ensuring suppliers adhere to the latest regulatory requirements. Suppliers can also use the platform to upload and update documents, thereby maintaining compliance with current standards.
Arcadyan actively participates in customers' Sustainable Development Program (SDP) and assists its suppliers in engaging with and adhering to the Responsible Business Alliance (RBA) and Joint Alliance for CSR (JAC). The company evaluates suppliers' performance in ten ESG dimensions, including circular economy, resource and energy management, environmental protection, labor and human rights, ethical standards, and supply chain management. Arcadyan undertakes a two-year sustainability performance enhancement project to help suppliers establish sustainable management solutions. In 2023, two suppliers participated in this development program, and through continuous improvement over the two-year period, they received silver-level recognition.
Go Green with Arcadyan Carbon Reduction Project
In October 2023, Arcadyan launched the "Go Green with Arcadyan" project, inviting 14 suppliers of high-carbon components in key products to participate in carbon reduction efforts. The project systematically guides suppliers in developing organizational and product-specific carbon reduction plans, jointly establishing the first phase of carbon reduction improvement programs. This includes conducting carbon emission inventories, setting reduction targets, and formulating specific carbon reduction action plans. In addition to raising suppliers' awareness of carbon reduction, Arcadyan also integrates circular economy and eco-design principles to achieve effective carbon reduction. This initiative aims to fulfill environmental commitments for Arcadyan, its supplier partners, and customers on the path to net-zero.
(Video Link: 2023 Go Green with Arcadyan)
Since 2009, Arcadyan has participated in the CDP (formerly Carbon Disclosure Project) questionnaire. In 2023, a total of 30 suppliers (including their parent companies) completed the questionnaire, achieving a response rate of approximately 30%. The CDP Supplier Engagement Rating (SER), based on the climate change questionnaire, evaluates the connectivity of enterprises in upstream and downstream supply chains, products, and services to climate change issues. Responding to industry trends and customer demands, Arcadyan has developed low-carbon products, provided training to suppliers, and collected product carbon footprint data. Arcadyan also requires suppliers to implement energy conservation and resource management measures. In 2023, Arcadyan received an A- (Leadership) rating in the CDP Supplier Engagement Rating, affirming its leadership in this area. Arcadyan will continue to actively address the challenges of climate change, working collaboratively with suppliers to achieve carbon reduction goals and promote a more energy-efficient and sustainable development in the supply chain.
Recognition of Excellent Suppliers
At the end of 2022, Arcadyan revised its criteria for selecting excellent suppliers to include not only quality of delivered goods, customer complaint resolution, and service coordination, but also Corporate Social Responsibility (CSR) performance. This adjustment aimed to prioritize suppliers with strong performance metrics during procurement processes, while adjusting procurement weightings for suppliers with less distinguished performances.
In 2023, Arcadyan hosted its suppliers' conference, focusing on the Green Product Management System platform and related requirements. The conference facilitated discussions on current environmental and social issues facing the industry and encouraged dialogue with supply chain partners. Recognizing exceptional environmental and social responsibility achievements among suppliers, Arcadyan awarded medals to 15 outstanding suppliers. These awards aimed to motivate suppliers to enhance their CSR efforts and collaborate closely on corporate social responsibility initiatives.
(News: Arcadyan hosted Supplier Conference, collaborating with supply chain partners for carbon reduction)
Supply Chain Localization
Arcadyan takes the manufacturing centers in China and Vietnam as important production bases, and continues to develop local procurement in order to improve production, supply efficiency and economic scale. Most of the important components of Arcadyan's products, including power supplies, electronic components, electromechanical parts, printed circuit boards, and mechanism suppliers, come from Taiwan, China and Vietnam. As demand for products continues to rise, many Taiwanese suppliers have expanded their production capacities either in their own factories or in other regions of China or Vietnam. In order to reduce the energy consumption and environmental pollution caused by the transportation of raw materials and products, in addition to improving the effective use of packaging materials and space, using recyclable packaging materials. This approach aims to minimize excessive transportation costs and carbon emissions.
To balance operational continuity and reduce greenhouse gas emissions from transportation, Arcadyan is gradually increasing its local procurement ratio and continuously developing local suppliers through procurement management. In 2023, due to geopolitical factors and operational cost considerations, some key suppliers of CNC China Manufacturing Center relocated their production to Vietnam. This shift has resulted in a decrease in the proportion of local procurement expenditures in China compared to 2022. Meanwhile, the Vietnam Manufacturing Center has introduced new-generation models for production. However, due to supply chain disruptions from the previous year's lock-downs, local suppliers' relocation plans were delayed and not fully implemented by 2023, leading to continued reliance on Chinese suppliers for key components. Consequently, the target of achieving a 15% Vietnam local procurement ratio was not
met. Arcadyan will continue to monitor suppliers' relocation plans, enhance the balance between local procurement and supply chain diversification. This approach will accelerate production efficiency, strengthen the resilience of sustainable supply, and reduce carbon emissions from the transportation of raw materials and components.
Con ict Minerals
Arcadyan adheres to the Responsible Minerals Initiative (RMI) standards and incorporates the prohibition of conflict minerals into its Sustainable Procurement Policy. Suppliers are required to sign the "Supplier CSR Commitment" pledging to comply with Arcadyan's responsible procurement policies. Arcadyan mandates that smelters/refiners in its supply chain adhere to the Responsible Minerals Assurance Process (RMAP) and submit Conflict Minerals Reporting Templates (CMRT) to manage the metal sourcing of components responsibly. In 2023, Arcadyan recovered 345 CMRTs with a recovery rate of 99%, and no instances of conflict minerals were found in the supply chain.
Arcadyan investigates the sourcing of metals such as gold, tantalum, tungsten, tin, cobalt, and others across all materials and their supply chains to ensure they are not obtained through illegal groups in conflict areas such as the Democratic Republic of Congo or through illicit smuggling routes. Arcadyan accepts anonymous reports of any potential violations related to conflict minerals regulations. Upon confirmation of any violations, procurement is immediately halted, and suppliers are required to provide written explanations along with improvement and prevention measures to ensure compliance with conflict-free metal requirements. Arcadyan continues to advocate for humane mining practices and urges suppliers to prioritize ethical standards, labor rights, health and safety, and environmental protection.
For reporting complaints, please contact us via email at ethics@arcadyan.com