CORPORATE SUSTAINABILITY

Supplier and Contractor Management

Strategy

1.

Increase cost leadership: Integrate UMC group resources to achieve the most competitive supply chain value through strategic cooperation.

2.

Establish sustainable supply chain capabilities: drive suppliers to improve economic, social and environmental performance, and their sustainable development efforts.

3.

Enhance the supply capacity within the supply-chain: Continuously advise vendors on diversifying their supply and localized sourcing

4.

Building a green supply chain: Encouraging suppliers on energy conservation and carbon reduction to form a circular economy.

5.

Pay attention to environmental friendliness: Actively implement green procurement, pursue economic benefits and consider eco-friendly balance.

6.

No compromise on conflict minerals: Ensure that products and supply chain do not contain conflict minerals.

7.

Implement sustainable risk management: Focus on suppliers' energy resource use and water resources management to respond to the impact of extreme climate change on the supply chain.

8.

Focus on environmental issues: Strengthen waste recycling and reuse, and strive to reduce environmental pollution impact.

Commitment

·

To firmly believe the key point of an enterprises management is to fulfill economic, environmental, and society obligations. To voluntarily reinforce the enterprise's commitment to these obligations, and promote the benefits to customers, employees, suppliers & the community.

·

To monitor fire and earthquake damage, security risks & hygiene, environment, and labor rights. Supply chain risk management is also a competitive capability; as such, the company shall focus on supply chain vendors risks and voluntarily provide any assistance, if necessary.

·

To ask suppliers to conduct the survey and management of the current business operating status, material sourcing diversification and the geographic dispersion of suppliers' production. To reduce the material shortage risks from extreme climate or serious natural disasters.

·

To build up our risk evaluation program for supply chain vendors and establish an eternal evaluation method for them. To regard the method as the risk evaluation element and become one of the most important UMC procurement strategic references with elements of delivery date, quality, finance and business operation.

·

UMC requires suppliers to guarantee conducting suppler assessment and obtaining supplier signatures non-conflict minerals and ensure that products from suppliers the use of tin, tantalum and tungsten. UMC shall exercise due diligence in supply chain audits to exclude the use of conflict minerals from the Democratic Republic of Congo (DRC) or Central Africa. UMC encourages suppliers to promote similar management policy. UMC has announced related procurement policy to CSR column in the official website to ensure metal procurement procedure meets social and environmental responsibility.

·

To respect and protect the rights of intellectual patent property and conduct fair trade, advertisement and competition.

·

To commit to business integrity and forbid any inappropriate profit acceptance, corruption, extortion, or defalcation. To establish an identification and penal security mechanism.

UMC is a party to the global consensus for supporting supply chain and source management and uses certified sources of minerals from non-conflict areas. UMC also requires suppliers to ensure that their products and supply chain are free from conflict minerals. When selecting new suppliers or assessing existing suppliers, UMC shall exercise due diligence in supply chain audits to exclude the use of conflict minerals from the Democratic Republic of Congo (DRC) or adjoining countries.

Conflict Minerals Management

At UMC, we enforce conflict minerals management according to the Disclosures Relating to Conflict Minerals prescribed in Rule 13p-1 of the U.S. Securities and Exchange Act of 1934 of the US Securities and Exchange Commission (SEC). During new supplier selection, UMC requires new suppliers to introduce assessment systems and to present sourcing of minerals from conflict regions. Existing suppliers are also required to actively investigate and verify specified materials (gold, tantalum, tin, and tungsten), sign agreements prohibiting the use of conflict minerals, or provide a declaration thereof. UMC also exercises due diligence when implementing our investigations, and annual supplier audits were carried out to check whether upstream smelters / refiners of the suppliers utilize conflict minerals. Lot traceability for the supply chain is in place to ensure that no conflict minerals have been used. UMC is also an active participant of global advocacy groups such as the Conflict-free Sourcing Initiative (CFSI) of EICC-GeSI. Information on suppliers that meet conflict mineral requirements was acquired from the Conflict-free Smelter Program (CFSP) as a basis for supply chain and source management. Suppliers were also required to refer to the latest Conflict Minerals Reporting Template of EICC to provide information related to conflict minerals. Dedicated UMC personnel were assigned to verify a supplier’s compliance to EICC standards for ensuring the total exclusion of conflict minerals usage.

In addition to implementing conflict minerals management according to corporate policy and commitment, UMC also submits Specialized Disclosure (SD) forms to the U.S. SEC while publishing the completed forms on its official website to declare the outcomes of conflict minerals management efforts and demonstrate our commitment to corporate social responsibilities.

The latest SD forms may be downloaded through the link at the right of this web page.

Supply Chain Management Approach

Supplier Sustainability Management Capability Evaluation

UMC upholds the supplier policy of “treating suppliers as partners and guiding suppliers for long-term cooperation” to plan a comprehensive management system for suppliers. The following five standards were adopted to regulate and guide suppliers, hoping to establish a supply chain management system with sustainable development.


Required Items For Supplier Sustainability Evaluation



Establishing Sustainable Supply Chain

The core value of UMC's sustainable supply chain is "Sustainability and Mutual-Development." UMC pursues sustainable operations by partnering with its supply chain to achieve mutual growth. In addition to the existing environmental training for the suppliers, UMC extended its supply chain management to implement initiatives for sustainability, strengthening the guidance for local suppliers to establish sustainable supply chain capability. In order to strengthen the capacity of the supply chain, UMC continued to guide suppliers in establishing diversified and local supplying capability. To enhance the awareness of procurement personnel on sustainability initiatives and effectively implement the sustainable supply chain management, UMC held a number of educational training courses to accelerate the development of sustainable supply chain management.

 

Project

Strategy

Activity

 

Environment, safety and health education training plan for suppliers and contractors

To ensure that the contractor has sufficient knowledge of environmental safety

Training for suppliers and contractors with safety work related rules

Contractor-aligned meeting

To make sure contractors are conscious of workplace safety

Routine meeting for safety management announcements and accident advocacy for each site.

Sustainable supply chain sharing session

Themed with "Sustainability & Co-prosperity,", advocate the concept of sustainable development to suppliers

• Advocate UMC's human-oriented sustainable conduct and co-prosperity in society
• Continue promoting supply chain to respond to ESG requirements
• Continue promoting supply chain to respond to RBA requirements
• Continue promoting supply chain to respond to of risk management requirements
• New challenge to sustainable supply chain

Sustainable supply chain management training for buyers

Promote sustainable advocacy to be carried out for routine procurement operation. To understand the trend of global business sustainable development

• Internal employee training curriculums:
• Buyer's knowledge-RBA execution
• Supply chain management of green procurement
• Business Continuity Planning (BCP) of supply chain management

• How ESG responds to DJSI requirement
• Conflict mineral management
• Supplier audit experience sharing

Counseling local suppliers to improve

Enhance suppliers' abilities and productivity; lower workplace safety accidents

• Modify bypass installation (Focus on: poor tool uptime )
• Improve inside components (Focus on: Corrosion issue)
• Expand production line (Focus on: capacity shortage)

Suppliers localization

Create local employment opportunities to promote local prosperity

• Expand production line in Taiwan

Second source implementation

Lower risk of raw material shortage

• Evaluate and select qualified suppliers


Supplier Sustainability Evaluation- Supplier Risk Management Evaluation

UMC attaches great importance to the sustainable management of suppliers. For the requirements of sustainability, we focus on the environmental, social and corporate governance requirements of suppliers. In response to the supplier's sustainable management, UMC established the "Supply Chain Management Committee" and formulated the "Supplier Evaluation Mechanism" (or the Dow Jones Sustainability Index Selection Mechanism) to regularly manage and evaluate the improvement and tracking of vendors. Each year, Q (Quality), C(Cost/Financial), D (Delivery), S (Service), S (Sustainability) are evaluated.

Supplier management performance was included as an indicator item in supplier evaluations conducted by UMC. UMC requires all its suppliers to sign the “Supplier and Employee Professional Ethics Agreement,” asking its suppliers to strictly follow the Codes of Conduct and social responsibility related regulations. Also, suppliers should require their own suppliers, contractors and service providers to adopt the above regulations. Suppliers should assess their supply chain regularly. The extent of suppliers’ obligation will be a condition when procurement strategy is conducted. Suppliers having certifications related to environmental protection or hazardous substance management (ISO 14001, TS 16949, or QC080000) or can demonstrate capabilities in fulfilling the requirements of the EICC Code of Conduct may be provided with additional points. This incentive was provided to help guide and encourage suppliers to comply with these standards.

Supplier Sustainability Evaluation – On-Site Audit/Improvement Guidance and Follow-Up

UMC has a supplier lack of improvement management mechanism. According to the UMC supplier risk assessment mechanism, the company will conduct on-site audits and propose solutions for suppliers with scores that are too low and suppliers failing to fulfill contractual obligations. Following UMC’s assistance and consulting, suppliers are expected to complete improvements. If the manufacturer fails to improve, UMC will continue to provide guidance while evaluating short-term suspension of the supplier or termination based on supply chain risk. Suppliers that are still unable to improve within two years will face reduced purchasing amount, suspended purchasing or cancellation as a qualified supplier according to the degree of risk of the supplier

Circular Economy

To respond fulfilling corporation social responsibility, as a citizen on the earth, UMC is devoted to environmental protection, energy saving and carbon reduction. In order to expand corporation social responsibility, UMC proposed (UMC 3R League) RRR Major League in 2017 through reuse, recycle and reduce. UMC invited suppliers to join the green supply chain and upgrade the green supply chain. 26 suppliers joined in 2017 to start the 3-year RRR Major League Project, including suppliers for bulk chemical material (9 suppliers), suppliers for waste treatment (10 suppliers), and suppliers for parts clean and maintenance (7 suppliers). In addition to quantification index for reviewing output of energy saving, waste reduction and circular economy, UMC held 3 seminars for sharing experience, inviting suppliers to share their experience, in order to promote UMC’s green supply chain policy. UMC expects to have consensus for green products with suppliers and works on it to be win-win.

UMC Triple R League

UMC believes that green supply chain management is an important part of the sustainable blueprint for business. The circular economy is a recoverable and renewable system that is eco-friendly. We have been promoting the "UMC Triple R League" for three years since 2017 ( Triple R: Reuse, Recycle, Reduce), and we expect to work with suppliers to upgrade the green supply chain.

The purpose of Triple R is to examine the results of promoting energy conservation and waste reduction and circular economy through vendor-defined quantifiable indicators. It also organizes multiple sharing sessions and invites suppliers to share experiences to promote and communicate the company's green development. The policy of supply chain management provides a platform for peers and different industries to openly exchange knowledge and reach green product consensus. UMC expects to plant Triple R DNA in local manufacturers, and hopes to work together to achieve energy conservation and carbon reduction to do our best for the earth's environmental protection.

UMC’s Triple R League joint declaration
• We are committed to “targeting zero pollution and complying with or exceeding environmental laws and regulations”
• We are committed to “implementing environmental management and integrating overall organizational management”
• We are committed to “developing environmentally friendly technologies and strengthening source waste reduction and pollution prevention”
• We are committed to “conforming to international environmental trends, making good use of and recycling energy resources”


In 2017, a total of 4 sharing sessions were held. In addition to promoting and communicating with UMC's policy of promoting green supply chain management, UMC and suppliers shared their practical experience in energy conservation and carbon reduction, and more importantly, invited suppliers and business partners do share experience related to Triple R, providing a platform for peers and businesses to openly communicate.


In April 2018, UMC held the first Triple R League Awards Ceremony, which provided an opportunity to publicly reward suppliers who responded to the green supply chain. 10 Outstanding Achievement Awards, 9 Excellent Achievement Awards, and 5 Best Partner Awards were presented at the event. UMC hopes to use its resources to promote enhancements to the green supply chain and hopes to call for more manufacturers to participate.


The 2018 Annual Sharing Conference brought together all of the participating Triple R supplier types, including raw materials, equipment, component parts and waste disposal suppliers. In addition to the experience sharing between the supplier and UMC’s facilities department, vice president of Taiwan’s Comprehensive Research Institute - Gu Yang, was invited to share his knowledge from academic research and energy-saving policy experience with UMC and supplier partners, so that together, we may carry out industrial energy-saving and carbon reduction.


The theme of this sharing session was water saving and waste reduction. The sharing session started with the 12-inch fab’s water-saving experience, and invited 36 suppliers to participate. Among them, Merck KGaA and Excelsior Technology Inc. shared their experience on water reuse. Also Dr. Huang Zhibin, a professor at National Chiao Tung University's Institute of Environmental Engineering, who has outstanding achievements in the field of water resources treatment, was invited to discuss the link between the industry and the academic community.

 

In April 2019, UMC held the second Triple R Grand Prize Awards Ceremony. This year, 35 suppliers responded, and 18 suppliers received awards, including 2 Best Contribution Awards, 6 Outstanding Achievement Awards, and Excellent Achievement Awards. 3 suppliers were awarded Best Partner Awards. Of the winners, 11 were repeat recipients from the previous year. Seven suppliers participated in the award for the first time. Deputy Mayor Hui Hong Shen of Hsinchu City and Deputy Director General Zeng Ru Xu of Hsinchu Science Park Administration presented the awards. With the theme of “Practicing Circular Economy, Creating a Green Supply Chain, and Creating a Sustainable Future,” UMC promotes the sustainable development of enterprises and practices corporate social responsibility, and invites suppliers to build a green supply chain. UMC takes the lead in working with suppliers to move from "energy saving and waste reduction" to "circular economy" to promote the value of green processes and sustainable development.


Contact us: For further Triple R League information, please email RRR@umc.com





Back to Top

Back to Top

A+ A-

Contact Us
csr@umc.com

Download

Form SD
CSR Report
 

Contact Us
Vendor Contact

Leadership
About UMC
Investors
Corporate Responsibility
Press Center
Careers
Popular Links