Delivering Sustainable Value For Our Stakeholders Delivering Sustainable Value For Our Stakeholders Press Metal Aluminium Holdings Berhad 108 109 Integrated Annual Report 2023 Upholding Good Governance and Economic Resilience In alignment with the Organisation for Economic Cooperation and Development (“OECD”) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (“DDG for CAHRAs”), our programme comprises a meticulous five (5) steps protocol that focuses on identifying and managing risks associated with CAHRAs, further enhanced to incorporating ESG criteria. Within Supplier Management Programme, we define our suppliers into three (3) groups – mineral-related, non-mineral related and service providers – each of which are to varying degrees of scrutiny and assessment based on potential ESG risks and impacts inherent in their operations. The evaluation process begins with the administration of a self-assessment questionnaire covering diverse ESG facets such as human rights, labour standards, environmental management and anti-corruption measures. Following this, appointed auditors will conduct a desktop review to assess the risk level of each facet. Based on their assessment, the appointed auditors will recommend to the designated Senior Management in deciding whether to approve the supplier or should the supplier undergo further audit, either through an in-depth due diligence procedure or an on-site audit. Suppliers shall fully assist and render their full cooperation whenever due diligence is required, as stipulated in the Responsible Sourcing Policy. Where gaps are identified, we collaborate with the concerned suppliers to develop time-bound action plans, which will be monitored by us. During the period, we provide ongoing support, in tandem with our commitment towards collaborative and responsive supplier ecosystem. For underperforming suppliers that are unable to meet the agreeable action plans, we adhere to the OECD’s DDG for CAHRAs and the ASI Performance Standard Guidance. In such cases, we may either: • Continue trading with the supplier while implementing measurable risk mitigation efforts; • Temporarily suspend trade while actively pursuing ongoing risk mitigation measures; or • Disengage with the supplier if attempts at mitigation fail or if risk mitigation is deemed infeasible or unacceptable. In addition to the responsible sourcing assessment, all new and existing suppliers undergo annual assessments based on five (5) key criteria: Quality Conducting Supplier Training and Assessment We provide training to our suppliers on responsible sourcing practices and governance policies, including ABAC Policy and Responsible Sourcing Policy, to promote awareness of our business practices and expectations of responsible procurement within our supply chain. In our evaluation of suppliers and their business practices, we not only gain valuable insights into their conduct of business but create the opportunity to learn and share responsible sourcing practices. This approach fosters a culture of sustainability and responsibility, by cascading positive impacts to our immediate suppliers and to their end of suppliers, creating a sustainable value chain. After the assessment, an audit report detailing the supplier’s performance will be shared, to facilitate constructive dialogues for improvements. HOW WE PERFORMED IN 2023 Supplier Assessment Update In FYE2021, Press Metal launched the Supplier Management Programme, focusing on assessing our suppliers’ ESG performance in a phased approach. Our current assessment targets material suppliers, particularly mineral-related suppliers, and suppliers with procurement value exceeding RM5 million. Information covering the supplier’s environmental and social performance, including Scope 1, 2 and 3 GHG emissions and health and safety metrics will be requested. In FYE2023, a total of 37 new and existing suppliers have undergone the ESG assessment. Additionally, as of FYE2023, 1,267 suppliers have submitted written affirmations in adherence to our SCoC. Upholding Good Governance and Economic Resilience Existing Suppliers Screened for ESG Criteria 51 35 Number of Key Suppliers Identified Number of Key Suppliers Assessed Notes: 1. Aggregated data from our midstream facilities (PMBtu, PMS and PMAR). 2. Covered mineral-related suppliers and suppliers with transaction value more than RM5 million. 68.6% of the total existing suppliers were screened 33.3% of the total new suppliers were screened New Suppliers Screened for ESG Criteria Notes: 1. Aggregated data from our midstream facilities (PMBtu, PMS and PMAR). 2. Covered only mineral-related suppliers. 6 2 Number of Key Suppliers Identified Number of Key Suppliers Assessed Services Punctuality Pricing Compliance OUR VALUE CREATION Enhancing Supply Chain Traceability We enhanced our supply chain traceability by meticulously tracking material origins, supplier sourcing practices and conversion processes through our Supplier Self-Assessment Questionnaire (“SSAQ”). This initiative promotes transparency and fosters ethical and sustainable procurement practices, strengthening our ability to identify and mitigate potential procurement risks. In addition, we launched the Vendor Data Management Project in FYE2023 – a digitalised and centralised platform that consolidates vendor information – to streamline supplier selection and facilitate efficient comparison of procurement quotations and product offerings, in driving greater supplier traceability. Supporting Local Suppliers We are committed to strengthening the local economies in our operational areas by actively seeking partnerships with local suppliers whenever feasible. This not only creates job opportunities within our local communities but also stimulates economic growth. Furthermore, engaging with local partners enables shorter lead times, facilitates communication, empowers local skills and enhances supply chain flexibility. Following the assessment, we concluded that there were no suppliers with red flags within the supply chain. However, we have identified suppliers with shortcomings in their management systems and gaps in social and environmental practices. Consequently, we have provided recommendations to our suppliers to mitigate such issues within agreed timelines. Local Procurement In FYE2023, 94.6% of our total suppliers were local suppliers, with 42.3% of our procurement expenses allocated to local suppliers for the purchase of materials and provision of services.
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