157 ANNUAL REPORT 2022 OUR CAPITALS SOCIAL & RELATIONSHIPS CAPITAL MATERIAL TOPIC: SUSTAINABLE SUPPLY CHAIN MANAGEMENT DEFINITION OF MATERIAL TOPIC Management of suppliers and contractors to ensure sustainability principles are upkept within the value chain. IMPACTS S1 S2 S3 S4 S5 S7 S9 S10 GS1 GS3 GS5 WHY IS THIS TOPIC MATERIAL TO US? As we have long-term commitments in the countries where we operate, we continuously work to strengthen our supply chain, as this is crucial to the continuity of our business. The sustainability performance of our vendors and suppliers are important considerations during vendor selection, as we firmly believe that this indicates their ability to remain resilient amid changing circumstances. Developing our supply chain’s understanding and capabilities in ESG is a significant way to enhance business productivity and improve sustainability. A supply chain that aligns with our focus on sustainability shares our goals for a better future. This shared understanding sets a firm foundation on which collaborations can be built. CHALLENGES • Suppliers who have poor sustainability performance are more likely to experience disruptions to their operations, in turn affecting their client’s operations. • Suppliers, and by extension their clients, may experience reputational damage due to lapses in ESG practices. OPPORTUNITIES • Companies who actively advocate sustainability practices in their supply chain can increase the overall sustainability of the industry and community. • Having a sustainable supply chain may uncover potential for innovation and market differentiation. • Companies who take a firm stance on the sustainability of their supply chain can gain reputational advantages that can increase the attractiveness of the business to potential clients, investors and employees. Management approach Over the years, Yinson has continually enhanced our vendor pre-qualification assurance and vendor performance capabilities with regards to ESG performance. In FYE 2021, we further enhanced our ISO 9001-qualified VRP to include the following: an ESG Module, country specific forms to registration sites (Regulatory data), supplier annual updates on key focus areas, remote support question set, clarifications on safety and compliance and finance question sets, and improved functionality (insurance and ABAC and sustainability rules and Yinson Categories of Supply). Alongside commercial considerations, ESG considerations form part of the screening done through the VRP, with criteria including third party sanctions and negative media monitoring, HSEQ risk assessments, employee training, adequacy of health and safety management systems, fair labour practices, safety culture and pollution prevention. We require all vendors to comply with Yinson’s ABAC Policy and provide an ABAC declaration as part of the registration and pre-qualification process in the VRP. In addition, we further require our high-risk vendors to complete an online training and an assessment to ensure they understand Yinson’s stance on ABAC matters. We also carry out ESG engagements with vendors that are flagged through our VRP as not meeting our established criteria. When flagged, Yinson’s compliance personnel will engage with vendors for reconciliation exercises, and work with the vendors towards completing the assessment process. In March 2022, we released a new ESG module that is benchmarked to global standards and methodologies including GRI, ISO, CDP, TCFD, WEF and SASB standards. Compliance of our supply chain & third parties, pg 73; Vendors & suppliers, pg 128 MS1
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