Performance 2024

The company has developed a supplier code of conduct that aligns with its code of conduct and international best practice standards. Training and communication efforts have been implemented to ensure that suppliers understand the importance of conducting business responsibly concerning the environment and society, as well as adhering to good governance practices. This code serves as a guideline for suppliers to align their operations with the company’s practices. It is mandated that all tier-1 direct suppliers (Tier-1 suppliers) and new suppliers sign acknowledgement of the code from the start of the registration process. The company has established a process to monitor supplier operations and evaluate their performance to ensure compliance with the supplier code of conduct.

In 2024, the company communicated the code of conduct to suppliers and facilitated their signing of the supplier code of conduct as follows:

The company follows operational guidelines to develop a sustainable supply chain as follows:

Selection and Registration of New Suppliers

The company has established guidelines for the consideration, selection, and registration of new suppliers by conducting preliminary assessments of suppliers and contractors before procurement. This is done using a questionnaire that evaluates four key qualification areas and verifies relevant quality certification documents.

When a new supplier achieves a passing score and demonstrates no economic, social, environmental, or governance risks, and signs the supplier code of conduct, the company will proceed with the registration of the new supplier. However, if the score does not meet the evaluation criteria or if there are identified risks, the supplier must implement corrective measures or develop preventive actions and a clear monitoring plan to achieve an acceptable score before being registered as a new supplier with the company.

In 2024, the company registered a total of 161 new suppliers, all of whom passed the selection process outlined, representing 100% of all new suppliers.

Classification of Suppliers

Identification of Critical Suppliers

The company has analyzed and identified critical suppliers from all suppliers and contractors that deliver goods and services in the supply chain. The criteria for evaluating critical suppliers include the procurement value, being a seller of products that are essential to the business, and being few in number in the market or unable to find alternative products. The criteria are as follows:

Risk Assessment in the Supply Chain

The company conducts risk assessments of suppliers that may impact its business operations as well as society and the environment at least once a year. This is achieved through supplier assessments, interviews, and document verification, covering economic risks such as quality, timeliness, consistency of delivery, and sourcing; environmental risks including compliance with environmental laws, management, and prevention of impacts on the environment and natural resources; social risks like labor practices, respect for community rights, and safety; as well as governance issues such as fair competition and anti-corruption measures.

Supplier Audits

The company conducts on-site audits of suppliers that cover economic, environmental, social, and governance issues. In 2024, the company had 41 suppliers that fell within the criteria for on-site evaluation. The company has successfully completed the assessments for all 41 suppliers, representing 100% of the total number of suppliers that required evaluation.

Capacity Building for Suppliers and Farmers

Developing a sustainable supply chain that aligns with international standards or various regulations requires significant knowledge and engagement from suppliers, particularly those supplying key raw materials in the production process. The company focuses on raising awareness among raw material suppliers about responsible business practices, providing education on the quality and productivity of rubber, along with guidelines that comply with human rights principles and new regulation changes both domestically and internationally that affect the rubber industry.

FSC-FM Standards Training Program

The Forest Stewardship Council (FSC) is a significant certification standard for the natural rubber industry, providing certification for sustainable forest management and responsible supply chain practices, such as ethical labor practices and transparency within the supply chain. Obtaining FSC certification helps prevent deforestation, protect biodiversity, and support fair labor practices, while also enhancing traceability from the planting area to the final product.

Low Emission Support Scheme (LESS)

The company has plans to reduce other greenhouse gas emissions (Scope 3), which primarily originate from the transportation of raw materials from suppliers. To address this, the company has sought and selected suppliers who are committed to adapting to climate conditions and have approaches to reducing greenhouse gas emissions. Recognizing that suppliers may not fully understand this issue, the company focuses on enhancing the capacity of local suppliers to learn and understand how to reduce greenhouse gas emissions in their operations as a priority. The company promotes participation in the Low Emission Support Scheme (LESS) run by the Thailand Greenhouse Gas Management Organization (Public Organization), offering consulting support to suppliers in preparing and verifying data related to greenhouse gas reduction activities. These activities may include reducing electricity usage, waste segregation, decreasing chemical fertilizer use in agriculture, reducing fuel consumption for transportation, and tree planting.

NER for Sustainable Supply Chain Development Project - Year 3

The company has continued the “NER for Sustainable Supply Chain Development” project for the third consecutive year, training farmer suppliers in 16 districts of Buriram Province, totaling 61 participants. The training provided knowledge about rubber production, including achieving high-quality rubber, identifying contaminants, factors affecting tapping and latex yields, the sourcing of latex, and product delivery.

Supplier Development Program for EUDR (EU Deforestation Regulation)

In response, the company has initiated a project to develop suppliers toward EUDR compliance to prepare its raw material suppliers and smallholders in the supply chain. The program encompasses knowledge and understanding of the EUDR and its impacts on the agricultural sector, along with practical guidelines for compliance with EUDR requirements, traceability, conservation of natural resources, and obtaining relevant certifications and international standards, along with the benefits or returns from participating in the program.

Responsible Sourcing of Raw Materials

The company believes that sustainable success must be based on systematic responsibility towards society and the environment in all business processes of the company and its suppliers. Therefore, a Responsible Sourcing Policy has been established to ensure that the procurement or sourcing processes of the company will help reduce negative impacts on the environment, society, and economy across the supply chain, while also creating value and sustainability for all stakeholders. Transparency and respect for human rights are considered core principles.

Fair and Transparent Sourcing of Raw Materials

The company is committed to conducting the procurement of raw materials with integrity and fairness, establishing criteria, measures, and practices that are open, transparent, and verifiable. It places importance on all suppliers without discrimination and has developed a raw material procurement system that ensures equitable benefits between large and small suppliers. The procurement policy is communicated to all distributors and rubber farmers to ensure widespread understanding.

• The company has developed scientific methods and standards for analyzing the quality of rubber to ensure transparency and verifiability. This involves analyzing the rubber content, known as Dry Rubber Content (DRC), in a laboratory accredited under the ISO/IEC 17025:2017 standard. This test yields more accurate and reliable results that ensure fairness to suppliers.
• The company announces prices in advance through various channels so that suppliers are informed before making decisions to sell raw materials. The purchasing price is based on the central market price set by the Rubber Authority of Thailand or verified prices from credible sources, and these prices are updated regularly to reflect the current market conditions.
• Procurement of local raw materials not only enhances business efficiency through stable sourcing but also reduces costs and energy consumption during transportation. Additionally, it contributes to the sustainable development of local communities, economies, and environments. The company is committed to supporting local economic development, especially grassroots economies, by purchasing rubber from smallholder farmers and local small enterprises without limiting itself to any specific group.

Promoting Good Liquidity for Suppliers

The company places importance on conducting business fairly with suppliers to promote cash flow management and working capital for both suppliers and the company. Therefore, it has established policies and practices for the payment of goods and services to suppliers in a fair, accurate, transparent, and timely manner, paying according to the installments or credit terms specified in the contract conditions.

Verification of Raw Material Acquisition

The verification of the sourcing of rubber is a critical process in the company's operations that helps create transparency throughout the supply chain. This ensures that the sourced materials comply with standards in terms of quality, legality, and ethics, while also preventing potential issues related to procurement. The company has implemented the following approaches:

1. Inspection of the source of raw materials.
2. Transparency audit in the procurement process.
3. Raw material quality inspection.
4. Legal compliance audit.
5. Monitoring safe and sustainable sourcing processes.
6. Ethical and human rights assessment.
7. Support for data verification with certified agencies.
8. Training and development of the purchasing team.
9. Complaint management and reporting.

Traceability throughout the Supply Chain

The company has set a goal for all products (100%) to be traceable back to their sources by the year 2028. The company is in the process of gathering information and developing processes and systems to ensure traceability of raw materials throughout the supply chain in accordance with international standards such as the EU Deforestation Regulation (EUDR) and the Forest Stewardship Council (FSC) with a collaborative operational plan with raw material suppliers as follows:

The main goals and notable outcomes of the initiatives focused on Sustainable supply chain are summarized in the table below.