Supply Chain Management

CHALLENGES

Supply chain management is a key factor for sustainable business operation. CKPower recognizes that good supplier management results from efficient economic, social, and environmental management.

Also strengthens relationships and creates value for all companies in the supply chain. In addition, decreasing of supplier risk presents a challenge for the Company as it has to manage its supply chains efficiently in order to minimize impact on the business.

OPERATIONAL GUIDELINES

CKPower has established the Supplier Code of Conduct to promote commitment to sustainable business practices that take into account the environment, society, and governance as well as to serve as guidelines for suppliers on compliance with laws, regulations, requirements, and international standards. The code of conduct also encompasses business ethics, labor and human rights, occupational safety and health, work environment management, as well as responsibility towards communities and society.

In addition, CKPower has established supply chain management strategies encompassing potential supplier selection all the way to supplier risk and performance assessment as well as encourages suppliers to conduct business with transparency, consider human rights and fairness in their labor practices, and comply with occupational health and safety and environmental standards.

Supplier Code of Conduct

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SUPPLIER CODE OF CONDUCT
Business Ethics	Human Rights and Labor	Safety and Occupational Health	Environment	Social Responsibility
Corporate governance Equitable and fair treatment Intellectual property Disclosure and confidentiality Delivery and quality of products or services Legal compliance	Non-discrimination Labor protection No use of forced labor Remuneration, benefits, and work hours	Workplace safety and environment Personal protective gear Emergency preparedness	Compliance with state environmental laws and regulations Implementation of corrective and mitigation measures for environmental impact Advocacy for efficient use of natural resources among employees	Consideration of impacts on communities and society in business operations Respect for local cultures and traditions Contribution to community and social development

EXECUTION

Sustainability Practices for Suppliers

In 2018, CKPower began working on supplier sustainability assessment by creating questionnaires, formulating guidelines, and defining its assessment guidelines and procedure. The Company began conducting supplier sustainability assessment as well as prescribed an additional goal of conducting on-site audits to ensure that suppliers operated in compliance with the supplier code of conduct. CKPower also strives to continuously improve the supplier sustainability assessment to ensure its consistency with its sustainability policy.

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2022 Execution and Performance

Training on Human Rights for Business Partners

In 2022, Nam Ngum 2 Hydroelectric Power Plant and Xayaburi Hydroelectric Power Plant organized training on human rights for their main business partners and general partners, totaling 28 participants. The objective of the training was to communicate the company's human rights policy and relevant practices to the partners, aiming to foster understanding of human rights. Furthermore, it serves as a guideline for business practices with partners in conducting their operations. The expected outcome is to reduce and prevent instances of human rights violations while also enhancing the knowledge of the partners and benefiting the local communities.

Business Partners Risk Assessment

CKPower has a process for assessing supplier risks and the potential impact on the organization's business operations, based on the criteria set by the company. These criteria include the likelihood of risks occurring and the severity of their impacts on various sustainability dimensions, including governance, economy, society, and environment. It covers issues of business ethics, labor practices and human rights, safety and occupational health, environmental management, and responsibility towards communities and society. The company sets four levels of risk assessment for these areas as following.

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In 2022, there were a total of 492 business partners, which accounts for 100% of the partners that the company assessed for risk. The results from the risk assessment revealed that the majority of the partners had a low level of risk. If the risk assessment of business partners identifies issues with a high to extreme level of risk, CKPower will implement risk management measures to bring it within an acceptable level.

Risk Issues	Risk Management Measures
Issues with extreme level of risk
Employment of child labor/migrant workers in violation of the law.	Establishing criteria for assessing the qualifications of business partners.
Violation of human rights or forced labor.	Company visit. Registering the names / profiles / copies of ID cards of the workers entering for employment. Registration document for foreign workers. Blacklisting of business partners.
Occupational health and safety of the workforce.	Conducting pre-work safety risk assessments. Require essential safety equipment for contracted workers.
Management of subcontractors/suppliers.	Conducting pre-work safety risk assessments. Specify ESG requirements for subcontractors in the main business partner's contract. Conducting audits to ensure compliance with company's safety measures.

New Approved Vendor

CKPower has prescribed new approved vendor with criteria covering sustainable topics in economic, social, and environmental dimensions, such as product and service warranty, product delivery, environmental policies and social responsibility, compliance with labor laws, and safety standards. At the same time, the Company also actively and continuously promotes and communicates its supplier code of conduct to all suppliers.

NEW VENDOR SELECTION	NEW VENDOR EVALUATION
CKPower has prescribed new vendor evaluation with criteria covering sustainable topics in economic, social, and environmental dimensions, such as product and service warranty, product delivery, environmental policies and social responsibility, compliance with labor laws, and safety standards. At the same time, the Company also actively and continuously promotes and communicates its supplier code of conduct to all suppliers.	As part of vendor selection, CKPower screens vendor candidates by evaluating their qualifications based on criteria covering environmental practices and social responsibility, product and service quality, delivery, experience, product warranty, safety standards, and legal compliance.

NEW VENDOR SELECTION

NEW VENDOR EVALUATION

CKPower has prescribed new vendor evaluation with criteria covering sustainable topics in economic, social, and environmental dimensions, such as product and service warranty, product delivery, environmental policies and social responsibility, compliance with labor laws, and safety standards. At the same time, the Company also actively and continuously promotes and communicates its supplier code of conduct to all suppliers.

As part of vendor selection, CKPower screens vendor candidates by evaluating their qualifications based on criteria covering environmental practices and social responsibility, product and service quality, delivery, experience, product warranty, safety standards, and legal compliance.

In 2022, all vendors, including 78 new vendors, underwent an assessment in governance and economic, environmental, and social aspects.

New Vendor Screening Criteria	Percentage of new vendors assessed in 2022	2022 Targets
Governance and Economy Report the operating results or financial position to related parties in a transparent and accountable manner. Operate in compliance with laws, rules, codes of ethics on the basis of fair competition and fairness. Support and cooperate with government agencies, private organizations, and the public sector in anti-corruption efforts. Respect intellectual properties and do not disseminate confidential information or other information obtained from business with customers. Engage in knowledge and experience exchange to achieve operational efficiency and business innovation. Acknowledge and comply with the CKPower Vendor Code of Ethics and Practice Handbook.	100%	100%
Environment Implement environmental management in compliance with laws, regulations, and requirements and monitor the management to comply with the legally mandated criteria. Improve the operation to support efforts to address the issue of global warming and reduce greenhouse gas emissions. Implement suitable, effective, and legally compliant water, pollution, and waste management. Certified or compliant with international environmental standards.	100%	100%
Society Comply with the law and uphold international human rights. Do not use or support the use of forced labor or child labor under the age defined by the law in any form. Provide employee compensation and benefits that are suitable and compliant with labor laws. Treat all employees equally and embrace diversity. Implement policies for personal right protection and prevention of physical, sexual, and verbal abuse, threats, and harassment. Offer employees an opportunity to negotiate in accordance with the legal procedure. Provide safe and sanitary work environments and equipment and have an occupational health and safety management system that has been certified to international standards.	100%	100%

New Vendor Screening Criteria

Percentage of new vendors assessed in 2022

2022 Targets

Governance and Economy

Report the operating results or financial position to related parties in a transparent and accountable manner.
Operate in compliance with laws, rules, codes of ethics on the basis of fair competition and fairness.
Support and cooperate with government agencies, private organizations, and the public sector in anti-corruption efforts.
Respect intellectual properties and do not disseminate confidential information or other information obtained from business with customers.
Engage in knowledge and experience exchange to achieve operational efficiency and business innovation.
Acknowledge and comply with the CKPower Vendor Code of Ethics and Practice Handbook.

100%

Environment

Implement environmental management in compliance with laws, regulations, and requirements and monitor the management to comply with the legally mandated criteria.
Improve the operation to support efforts to address the issue of global warming and reduce greenhouse gas emissions.
Implement suitable, effective, and legally compliant water, pollution, and waste management.
Certified or compliant with international environmental standards.

100%

Society

Comply with the law and uphold international human rights.
Do not use or support the use of forced labor or child labor under the age defined by the law in any form.
Provide employee compensation and benefits that are suitable and compliant with labor laws.
Treat all employees equally and embrace diversity.
Implement policies for personal right protection and prevention of physical, sexual, and verbal abuse, threats, and harassment.
Offer employees an opportunity to negotiate in accordance with the legal procedure.
Provide safe and sanitary work environments and equipment and have an occupational health and safety management system that has been certified to international standards.

100%

Critical Supplier Analysis

CKPower classifies its suppliers into three major categories: Critical Tier 1 Supplier, Non-Critical Tier 1 Supplier and Critical Non-Tier 1 Supplier to allow it to systematically analyze and formulate procurement strategies and assess supplier-related risks effectively.

Partner Type		Percentage
1. Critical Tier 1 Suppliers	are direct suppliers with high contract value of 10 million baht or higher per year; non-substitutable suppliers, such as advanced construction and engineering suppliers; and suppliers of products that are difficult to source from elsewhere, are considered critical components or equipment in production, and involve a high or extreme level of risk. Examples are such as: Suppliers with long-term contracts, non-substitutable specialization and expertise in advanced engineering, and high spending who may affect CKPower’s electricity production. Suppliers of equipment or services critical to production with large purchase volumes. Suppliers of equipment or services of high value that are critical to production	15%
2. Non-Critical Tier 1 Suppliers	are general direct suppliers with average spending or low contract value and with a medium or low level of risk.	85%
3. Critical Non-Tier 1 Suppliers	are suppliers who do not engage in business directly with CKPower but engage in trade with CKPower’s suppliers. They are selected from a list of suppliers of CKPower’s Critical Tier 1 Suppliers.	0%

Supplier Performance Evaluation and Monitoring

Supplier performance or efficiency evaluation is based on a set of criteria and CKPower’s Supplier Code of Conduct and enables the company to collect data related to the capabilities of its suppliers across governance, social, and environment. Three types of supplier performance evaluation are conducted: yearly performance evaluation, mid-operation performance evaluation, and on-site audit.

Suppliers with low performance or failing to pass the evaluation will be suspended temporarily or removed from the approved vendor list. The evaluation is based on the site audit checklist. CKPower assists suppliers in resolving their issues and works with them to enhance their potential in order to increase their business capabilities.

Supplier Risk Assessment

In 2022, CKPower conducted an operational efficiency assessment, covering ESG management, on a total of 492 suppliers, representing 100% of the Company’s total suppliers in 2022. The assessed suppliers consisted of 349 existing suppliers and 78 new suppliers, representing 16% of the Company’s suppliers. All 78 new suppliers underwent an ESG assessment.

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On Site Audit 2022

On-site audits are conducted to determine whether CKPower’s suppliers comply with the Supplier Code of Conduct. They are conducted not only on suppliers with a D rating but also Critical Tier 1 Suppliers who play a critical role on the production in order to offer troubleshooting assistance and advice and plan supplier capability development in collaboration with all relevant parties and the suppliers themselves before another assessment. In 2022, on-site audits were conducted at four companies, which were Critical Tier 1 Suppliers with a vital role in the production process.

Strengthening Supplier Relationships

CKPower strives to foster relationships with its suppliers through a wide range of training, seminars, and activities, where they are informed of the Company’s business approach, policies, and practices.

Safety Training for Suppliers

First Aid and CPR Training for Suppliers

In 2022, Bangpa-in Cogeneration Power Plant organized a first aid and cardiopulmonary resuscitation (CPR) training for 10 Non-Critical Tier 1 Suppliers. Led by an expert physician, the training session fostered knowledge and awareness of operational safety among the suppliers, which could help mitigate the severity of incidents and ensuing losses and could be further disseminated in their businesses.

Green Procurement

Placing importance on environmental conservation, companies under CKPower Public Company Limited have instituted a green procurement policy that encourages eco-friendly procurement practices and promotes the use of products made from renewable resources and non-polluting products, such as those certified with the Green Label, in an effort to protect the environment, use resources sustainably, reduce risks to employees and the Company from exposure to hazardous materials, instill green consumerism within the organization and society at large, and reduce costs through sustainable and cost-effective consumption. In 2022, the procurement of Green-Label office suppliers and Energy Star computer equipment amounted to a total value of 5,157,748 baht, equivalent to 65.39% of the overall expenditure of CKPower’s total office supply and computer equipment procurement.

Local Suppliers

CKPower promotes local procurement, which can enhance procurement efficiency and speed. By creating jobs and generating income for local residents, the practice also contributes to local economies and helps to strengthen relationships with communities and foster confidence among them.

Power Plants	Percentage of local procurement*
Bangpa-in Cogeneration Co., Ltd.	10%
Nam Ngum 2 Power Co., Ltd.	16%
Xayaburi Power Co., Ltd.	19%
Bangkhenchai Co., Ltd.	1%

*The term ‘local’ is defined as being in the same province as CKPower’s power plants or as being in Lao PDR for power plants in Lao PDR.

Trade Credit

To manage risks related to payments from its customers, CKPower offers a credit term of no more than 30 days for its suppliers as it has deemed that credit risk will rise significantly if the payment is made after 30 days as specified in contract terms. In 2022, the average actual credit term was 20 days, which was consistent with the Company’s policy.