Key Stakeholders: Shareholders/ Farmers/ Communities/ Suppliers/ Customers and Consumers
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Target
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Performance
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|---|---|---|
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The significant suppliers are assessed for
environmental, social and governance risks (ESG Assessment). |
100%
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64.6%
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Increase the adoption of green products
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2 items
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2 items
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Mitr Phol has establishedthe Agricultural Raw Materials Sourcing Policy, Sustainable Procurement Policy, andSupplier Code of Conduct . These serve as operational standards for both employees and suppliers, addressing key areas related to corporate governance, social responsibility, and environmental stewardship. Topics include business ethics, respect for human rights, fair labor practices, promotion of environmentally friendly products, and compliance with safety, occupational health, and environmental standards. These policies are communicated through various channels, and the Company actively monitors and enforces supplier compliance. All suppliers are required to sign an acknowledgment and acceptance of the Supplier Code of Conduct before entering into a business relationship with Mitr Phol.
In Mitr Phol Group's procurement system, the process for becoming a supplier is as follows:
Mitr Phol has a prudent process for verifying supplier qualifications and managing risks based on product and service categories, using the Supplier Position Model. All applicants wishing to register as new suppliers must undergo screening and selection to meet Mitr Phol's standard criteria. The supplier selection process takes into account general supplier information, assessments of business relevance and importance (e.g., price, technology, delivery lead time, order quantity), as well as environmental, social, and governance (ESG) risk assessments at the national, industry, and product levels, each weighted differently depending on the context. After passing the assessments and signing the Supplier Code of Conduct, suppliers become eligible for registration with the Company.
In 2024, the Company screened 2,462 new suppliers using ESG assessments, representing 87.37% of all newly registered suppliers. Additionally, a total of 967 suppliers, comprising both Significant Tier-1 and Significant Non-Tier-1 Suppliers, underwent sustainability risk assessments through an initial ESG risk evaluation (Deck Assessment), conducted either via self-assessment or on-site audits by the Procurement Division or Material Sourcing Section.
In addition, the Company has established an annual process for monitoring and evaluating partner performance. This includes assessments of product and service quality and standards, as well as reviews of environmental, social, and governance (ESG) risks for suppliers. This is to ensure that its suppliers strictly adhere to the Supplier Code of Conduct and to mitigate risks related to product quality, supply chain disruptions, and other operational concerns. Supplier performance is evaluated annually through self-assessments using questionnaires, 2nd party on-site assessment, or 3rd party on-site assessment based on internationally recognized standards such as the Bonsucro Standard for sustainable sugarcane production, the Supplier Guiding Principles, and the Sedex Members Ethical Trade Audit (SMETA). Assessment results are communicated to partners via email or other designated channels. Suppliers may also compare their results with those of other suppliers, enabling them to identify areas for improvement, enhance operational efficiency, and support continuous development. If a supplier is found to be in breach of the Supplier Code of Conduct, such as through violations of human rights, environmental standards, or corporate governance, the Company will issue a warning, outline a corrective action plan with a specific timeline, and closely monitor progress. Failure to comply may result in penalties, including contract termination and permanent removal from the Company's approved supplier list. Failure to comply with the minimum ESG requirement may result in penalties, including contract termination and permanent removal from the Company's approved supplier list. Moreover, suppliers with better ESG performance/score are more likely to be selected or awarded contracts, as sustainability performance is a key factor in the Company's supplier selection process. At present, ESG assessments are conducted for Significant Tier-1 suppliers, including those providing chemicals and packaging.
Furthermore, the Company monitors and supports the development of its suppliers through participation in supplier development programs aimed at enhancing operational efficiency and improving the quality of products and services. This results in benefits such as reduced production costs, increased sales, and lower operational risks for both suppliers and the Company.
Suppliers should operate their businesses in alignment with the Mitr Phol Supplier Code of Conduct and be aware of ESG principles. Suppliers with better ESG performance, according to the Company’s evaluation criteria, will be awarded honors such as special awards, certificates of recognition, or being named a “Model Farmer.” Additionally, suppliers who participate in co-projects with the Company will receive extra points. Suppliers who do not meet the minimum evaluation score must improve their performance and submit evidence of improvement to the Company. The Company will then consider and unlock their status.
Farmers who deliver burned cane will have their cane price deducted. However, they will receive extra payment if they deliver fresh cane, with the price determined according to the government announcement. If it is found that suppliers cannot meet the minimum ESG requirements (e.g., encroachment on reserved forests, forest areas, or conservation zones), the supplier will be excluded and the contract terminated.
All suppliers and farmers, especially significant suppliers, are invited to join the training programs, which include ESG components, at least once a year. These programs are: the Annual Seminar for Suppliers, the Farmer Association and Sugar Mill Annual Meeting.
Mitr Phol's suppliers are classified based on their roles or the nature of the products and services they provide. This categorization ensures that each supplier group is managed appropriately and efficiently. Suppliers are divided into 2 main categories, central suppliers and raw material suppliers, as detailed below:
They are providers of products and services or domestic and foreign contractors. Central suppliers are further classified into four subcategories as follows:
These are suppliers who sell essential raw materials used in the production process of various products or services, including:
The Company classifies significant suppliers based on procurement spend and the criticality of the products or services provided to enable the development of effective plans and strategies for supplier management. The criteria for identifying significant suppliers are as follows:
Mitr Phol has developed the Mitr Phol Procurement System (MPS) as a platform to support purchase requests, procurement activities, and supplier engagement. It also serves as a real-time communication channel for supplier announcements and enables the evaluation of supplier performance upon completion of product or service delivery. Data from the MPS is integrated with the SAP system, facilitating audits, enhancing transparency, streamlining workflows, and ensuring full traceability across the entire procurement process. This integration also facilitates more efficient resource utilization and effective cost management.
For food contact materials (FCMs) that may impact food safety, such as chemicals used in manufacturing and packaging, the MPS system tracks product quality, production origin, and transportation safety upon receipt of goods from suppliers. If the delivered items fail to meet the required specifications or pose any food safety risks, suppliers are required to correct the non-conformities within a specified timeframe.
Mitr Phol holds an annual supplier conference to communicate the Supplier Code of Conduct, procurement regulations, and quality standards for purchases and sales. Additionally, the Mitr Phol Supplier ESG Program was communicated to suppliers to inform them about the organization's sustainable practices. This included training to raise awareness of the importance of sustainable business development throughout the supply chain (ESG Awareness Training), focusing on environmentally friendly business operations (Environmental), respect for human rights and communities (Social), and conducting business with good governance (Governance). The Company also promotes supplier development programs and recognition initiatives, while gathering feedback and understanding suppliers' expectations to enhance the efficiency of collaborative processes. These efforts help increase revenue, reduce operational risks, and strengthen the relationships between the Company and its suppliers, enabling them to mutually achieve sustainable business growth.
To recognize committed suppliers and set a positive example for others, Mitr Phol held its third consecutive annual Supplier Awards Ceremony in 2024. A total of 92 outstanding suppliers received certificates and special awards, an increase of 18 recipients, or 24.3% from the previous year.
Developing employees' knowledge and understanding of sustainability in relation to their roles, responsibilities, and organizational context is crucial for enabling effective communication and supporting stakeholder development throughout the supply chain. The Company provides sustainability training covering environmental, social, and governance (ESG) issues. These efforts aim to both reskill and upskill employees, including those in procurement. In 2024, the sustainability training program covered topics such as carbon footprint, net-zero emissions, internal carbon pricing (ICP), human rights, and risk management.
