Management & Governance

Before working with suppliers, EVA Air evaluates their past credit records as well as other aspects, including supplier image and whether there are any records of serious legal (regulation) violations. In the new supplier evaluation and selection process, at least 10% ESG weighting is used as a criterion for overall assessment. Suppliers with better performance are given priority for collaboration. In 2023, all newly onboarded tier 1 suppliers were selected based on this standard. Specific country, industry, and product risks are also taken into consideration. We have announced the “Supply Chain Sustainable Development Policy” to the internal main procurement departments, and all the contracts with our major suppliers include termination or cancellation clauses. If any supplier is found to have violated the corporate sustainable development policy and SCoC, the Company may require improvements. If the supplier fails to make improvements within the specified period or commits significant violations, EVA Air has the right to terminate the contract.

Before working with suppliers, EVA Air evaluates their past credit records as well as other aspects ,including environmental, social, governance, business relevance, country-specific, sector-specific and commodity-specific aspects. The supply chain risk assessment process is as below:

In addition to requiring suppliers to provide good quality and meet delivery deadlines, EVA Air also works with suppliers to fulfill the responsibility of protecting the environment and providing a good employment environment in order to lead suppliers towards sustainability and thereby enhancing the competitiveness of the industry chain. In order to understand and grasp the sustainability status of the overall supply chain, we have formulated the Sustainability Assessment Questionnaire (SAQ) in our procurement procedure manual based on the UN Global Compact, the UN Framework and Guiding Principles on Business and Human Rights, Social Accountability 8000 International standard (SA8000), and the Responsible Business Alliance (RBA) Code of Conduct. Through the questionnaire, we evaluate the sustainability risks of suppliers. Then based on the survey results, we conduct on-site audit of high-risk and key suppliers to determine their actual conditions, provide recommendations and request improvements to be completed within a time limit. In 2023, questionnaires were issued to tier 1 suppliers and critical suppliers (tier 1 and non-tier 1), and the response rate was 100%. Based on the Sustainability Assessment Questionnaire (SAQ) results, tier 1 suppliers with an SAQ score below 70 are defined as "high-risk suppliers". If there are no suppliers with a score below 70, those with the lowest 1% of scores are regarded as "high-risk suppliers." For critical non-tier 1 suppliers, those with an SAQ score below 70 are identified as "high-risk suppliers".

Through in-depth analysis of the questionnaire responses, potential risks in the economic, environmental, and social aspects are identified in the supply chain. Audits and guidance are conducted for suppliers of concern, including those who may have higher risks and critical suppliers, to ensure effective risk control. In 2023, the overall sustainable risk assessment of the supply chain of EVA Air revealed three high-risk suppliers with scores below 70. Therefore, the results of the sustainable risk assessment were further analyzed, and the suppliers with the lowest 1% of scores or those with potentially higher risks were selected among the tier 1 suppliers. Audits and guidance were conducted for suppliers with potentially higher risks and those who are core, irreplaceable, have significant annual transaction amounts, and hold a critical position in ensuring the stability of the Company’s operations. Audits were conducted through online, onsite methods and independent third party audit. A total of 15 significant suppliers among the tier 1 suppliers were audited, and the investigation revealed potential risk factors such as violations of regulations resulting in penalties and labor working conditions. Information and resources were provided to address audit deficiencies; after discussion and guidance were given to suppliers, all improvements were made. As for critical non-tier 1 suppliers, based on the results of the risk assessment questionnaire, no high-risk signs were identified.