83 Environmental, Social and Governance Report 2023 PILLAR 3: CORPORATE PERFORMANCE Supply Chain Management ESR incorporates ESG considerations as part of its supply chain management on areas relating to sustainable procurement, operational resilience, and sustainability performance of suppliers. We work closely with a wide range of suppliers, including contractors, vendors, consultants, service providers, architects and designers in the development and management of our asset portfolios. Suppliers are assessed based on a set of criteria including track record, financial strength, and their commitment towards high standards of quality, environmental management, and safety. We work with our contractors to integrate the relevant ESG considerations into our value chain. Impact assessments are conducted prior to construction covering the effects on the environment and compliance with applicable laws and regulations. Suppliers are also required to adhere to our Supplier Code of Conduct, setting out the standards relating to regulatory compliance, business conduct, labour practices, environmental protection, sustainable procurement, health and safety training and awareness amongst other areas. For example, some requirements that the Group expects all suppliers to comply are: 1. Meet or exceed the requirements of all applicable environmental laws and regulations in terms of energy consumption, GHG emissions, water use and waste management. 2. Implement an effective environmental management system to manage and monitor energy, emissions, water and waste, and reduce environmental impacts in their operations. 3. Promote sustainable material sourcing and raw material extraction methods to reduce environmental and social potential impacts and seek to meet voluntary standards or programmes that address responsible sourcing criteria. Suppliers are expected to develop a sustainable procurement policy or an action plan to ensure that sustainable management practices are adopted. 4. Respect the five fundamental human rights in their operations as set out in the International Labour Organisation (“ILO”)’s Declaration on Fundamental Principles and Rights at Work. 5. Uphold health and safety standards and promote a safe and healthy working environment in accordance with all applicable laws and regulations. 6. Adopt a zero-tolerance stance towards all forms of corruption including bribery, extortion, personal or improper advantage. 7. Adhere to Group’s Whistleblowing Policy to allow any Supplier, staff or persons to raise concerns in good faith. Suppliers who fail to comply with the Code may result in contractual penalties, termination of contract and/or reporting to the local authorities. All current and prospective Suppliers are required to adhere to the Code. Furthermore, the Group has an Environmental Protection Policy that sets out our commitment to preserve the biodiversity and habitat surrounding our assets and projects. We adopt a biodiversity mitigation hierarchy framework to manage the risks and potential impacts related to biodiversity and habitat. This framework includes a structured approach to protect and conserve biodiversity and maintain the ecosystem through the following steps: Avoidance, Minimisation, Restoration, and Offsets. Through this framework and guidelines in this policy, we work closely with all our suppliers and their sub-suppliers to ensure that the natural environment (biodiversity and habitat) is protected and conserved. The Group also actively engages our supply chain through various industry consultations, forums and events to gain relevant insights and share best practices.
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