120 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2023 SUSTAINABLE SUPPLY CHAIN MANAGEMENT DEFINITION OF MATERIAL TOPIC Improving our management of suppliers and contractors to ensure sustainability principles are maintained within the value chain. MG4 GS1 GS2 GS3 GS4 GS5 GS6 IMPACTS S2 S1 S9 S10 S7 S5 EMBRACING GOOD CORPORATE GOVERNANCE Why is this topic material to us? Due to our long-term commitments in the countries where we operate, we strive to strengthen our supply chain to ensure the continuity of our business. The sustainability performance of our vendors and suppliers are an important criteria, as we firmly believe that this reflects their resilience during challenges. Enhancing the ESG understanding and capabilities within our supply chain improves business productivity and brings us closer to our sustainability goals. We strive to develop long-term relationships with vendors and suppliers who share our vision and approach towards sustainability. Management approach Yinson’s supply chain Our supply chain includes brokers, consultants, contractors, distributors, manufacturers and sub-contractors located across 23 countries. In the year under review, we engaged a total of 929 active suppliers. In 2022, we continued to strengthen our internal ESG supply chain procedures which require suppliers and contractors to integrate ESG considerations into their business to cultivate a sustainable supply chain. These procedures also cover other aspects such as diversity, equality, child labour and forced labour. We also continued to ensure that suppliers and contractors comply with Yinson’s health and safety guidelines through our VRP, further captured within vendor contracts as exhibits. In addition, we released our ESG Supply Chain Policy through our VRP for supplier compliance. The following are significant events that affected Yinson’s supply chain in the period under review: • Maria Quitéria Project initiated on 7 February 2022. • Atlanta Project start-up on 21 February 2022. • FPSO Anna Nery arrived in Brazil on 28 September 2022. • Signing of APA for FPSO Agogo on 2 December 2022. • FPSO Adoon completed operations for YP on 11 January 2023. Our vendor selection process We make every effort to constantly engage with our supply chain and third parties to encourage the highest standard of compliance. Yinson’s VRP is ISO 9001-qualified, which provides assurance for pre-qualification and vendor performance. Vendors who are keen to collaborate with us are required to submit their company details through the platform, which screens them and classifies them according to ‘registered’ or ‘pre-qualified’ categories. Vendors who are in the ‘registered’ category, are categorised as lower risk and go through a basic compliance checklist including acknowledgement of their compliance with Yinson’s COBE and ABAC policies. On the other hand, ‘pre-qualified’ vendors undergo a comprehensive screening that includes considerations for the vendor’s HSEQ management and performance, adverse media reports, watchlists, government records, sanctions, financial management, sustainability compliance, ABAC compliance, insurance and ISO certifications. Pre-qualified vendors must also go through the VRP’s ESG module, country-specific forms to registration sites (regulatory data), remote support question sets, clarifications on safety and compliance, insurance, ABAC and sustainability. The VRP undergoes a comprehensive internal and external audit process as well as a streamlined initiative to enhance supplier engagement and the onboarding approval process. Apart from commercial considerations, ESG considerations are conducted as an aspect of the screening via the VRP, with criteria including third party sanctions, negative media monitoring, HSEQ risk assessments, employee training, adequacy of health and safety management systems, fair labour practices, safety culture and pollution prevention. The ESG module is benchmarked against global standards.
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