126 YINSON HOLDINGS BERHAD | INTEGRATED ANNUAL REPORT 2024 MG3 SUSTAINABLE SUPPLY CHAIN MANAGEMENT Enhancing supply chain resilience through supplier and contractor management while promoting sustainability principles throughout the value chain. Risks • Changes in government policies and geopolitical instability could affect supply chain operations. • Misalignment with increasingly stringent local and international ESG-related regulations and laws. • Rising importance of Scope 3 supply chain emissions in ESG reporting regulations. • Increasing complexity of supply chains may weaken control and influence, leading to regulatory, reputational and market risks. Opportunities • Sustainability efforts in supply chains could lead to cost and operational efficiencies. • Enhancing supply chain reliability and resiliency ensures timely project delivery. • Holistic risk assessment improves understanding of supply chain interconnectivity and limitations. • Implementation of innovative solutions and technologies for effective management processes. Concerned stakeholders S2 S5 S6 S9 S8 S10 WHY IS THIS TOPIC MATERIAL TO US? Yinson strives to strengthen our supply chain to ensure our business runs smoothly. The sustainability performance of our suppliers is paramount, as it reflects their ability to navigate challenges effectively. By enhancing awareness and understanding of ESG principles within our supply chain, we can achieve our sustainability goals as outlined in Yinson’s policies and 30 by 30 goals. We aim to build longlasting partnerships with suppliers who share our vision and commitment to sustainability. Inadequate supply chain management may increase overall risks and costs, leading to project delivery disruptions and missed business opportunities. Social and environmental impacts can also pose risks to our supply chain, potentially resulting in reputational damage and legal consequences. MANAGEMENT APPROACH Our supply chain management is guided by a comprehensive internal framework and adheres to widely recognised international standards, guidelines, and industry best practices. Our due diligence processes encompass significant ESG topics, and we implement a contractual framework for our subcontractors, including our ESG Supply Chain Policy. Yinson’s supply chain Yinson’s supply chain encompasses brokers, consultants, contractors, distributors, manufacturers and subcontractors located across 23 countries. Throughout the year under review, we engaged with 1,064 active suppliers. In FYE 2024, we continued to enhance our internal ESG supply chain protocols. These protocols ensure that suppliers and contractors incorporate ESG considerations into their operations to foster a sustainable supply chain. Our procedures also cover aspects such as diversity, equality, child labour and forced labour. Further, we ensure that our suppliers and contractors comply with Yinson’s health and safety guidelines through our supplier contracts, operationalised through our VRP. Our supplier selection process We are committed to maintaining the highest standards of compliance through continuous engagement with our suppliers and third-parties. Our VRP provides assurance for pre-qualification and supplier performance assessment. Prospective suppliers who are interested in collaborating with us must submit their company details through the platform, which assesses and categorises them as ‘registered’ or ‘pre-qualified’ based on risk levels. Suppliers categorised as ‘registered’ undergo a basic compliance check, including acknowledgement of their compliance with Yinson’s COBE and ABAC policies. ‘Prequalified’ suppliers have undergone a comprehensive screening process covering various aspects such as HSEQ management and performance, adverse media reports, watchlists, government records, financial management and sustainability compliance. They also undergo assessments for ISO certifications, insurance, and ABAC compliance. Further, pre-qualified suppliers undergo the VRP’s ESG module, country-specific registration forms, remote support question sets and clarifications on safety, compliance, insurance, ABAC and sustainability. The VRP undergoes rigorous internal and external audits and continuous improvement initiatives to enhance supplier engagement and streamline the onboarding approval process. In addition to commercial considerations, ESG criteria are integral to the VRP screening process. These criteria include 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 aligns with global standards including GRI, ISO, VFR/SASB, SDG and CDP.
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