Supply Chain End-to-end Management
We have developed a series of management policies and procedures, including the “Code of Conduct for Suppliers of ANTA Sports”, the “Supplier Sustainability Management Handbook”, the “Protocol for the Management of Supplier Access and Exit of Apparel and Accessories Suppliers” and the “Protocol for the Management of Supplier Access and Exit of Footwear Suppliers”. These clearly define the processes for selection, introduction, auditing, rating, and complaint management applicable to tier 1/2/3 suppliers as well as subcontractors. The systems specify requirements for environmental management and social responsibility for suppliers and subcontractors, enhancing the efficiency of the entire supply chain management process. We regularly review relevant management systems based on applicable laws, regulations, and customer standards to avoid potential conflicts with ESG requirements. We have also incorporated supply chain risk management into our value chain management process. By conducting supplier sustainability risk assessments, we identify critical suppliers and formulate countermeasures and action plans to ensure the stability of our supply chain.
Admittance Screening
ESG audits are a crucial step for new suppliers entering our system. We have established a systematic supplier screening process, including information collection, preliminary review of information and on-site review. These stages comprehensively assess the supplier’s business qualifications, product quality, and other basic information. ESG factors such as health and safety management, environmental protection and labor management are also included in the scope of assessment to ensure that suppliers’ supply level, product quality, service capabilities, and their social responsible management performance meet our requirements.
Sustainability is one of the major assessment criteria during supplier screening process. In terms of environment, we focus on our suppliers’ waste, wastewater, waste gas and GHG emissions, as well as energy management. On the social front, we review whether suppliers strictly protect the health and safety of the workplace, respect various labor rights, including human rights and the right to freedom of association. In terms of governance, we conduct rigorous assessments of our suppliers to detect any instances of corruption, bribery or other forms of misconduct. Risk factors including country-specific risks, industry-specific risks, and product-specific risks were also involved into supplier screening process, hence to effectively mitigate potential risks and maintain supply chain stability. The identification of our critical suppliers is based on combinative consideration of procurement value, sustainability performance as well as other assessments.
Tiered Management
To improve and optimize the structure of the supply chain, we have adopted a categorized management of the entire supply chain to improve the management efficiency of supply chain operations. Suppliers are classified into tier 1 suppliers, tier 2 suppliers and tier 3 suppliers according to their material categories as well as service relations and other general factors. In addition, suppliers are differentiated into general suppliers or critical suppliers based on material analysis such as procurement volume, risk factors, etc.
Appraisal and Audit
For suppliers in the cooperation, we adopted a double-axis audit method to conduct annual audits of suppliers’ sustainable development status, in accordance with the provisions of the “Code of Conduct for Suppliers of ANTA Sports” and the “Supplier Sustainability Management Handbook”. This systematic evaluation assesses the suppliers’ capabilities in terms of quality, delivery, cost for current order execution, alignment with “Code of Conduct for Suppliers of ANTA Sports” as well as their performance in labor management, innovation development, environmental management, and social responsibility.
Through our annual supplier audit, our suppliers are divided into five levels, from the best performing ones to the least performing ones, based on their audit results: extraordinary, excellent, good, to be improved, and red line zone. In accordance with the “Apparel Supplier MIS Performance Appraisal Management Mechanism” and “Footwear Supplier Tiered Grading and Evaluation Management Control Mechanism”, we provide corresponding incentives for suppliers at different levels to encourage further improvement and motivate their initiative to fulfill contracts. We require all suppliers to have an ESG audit rating of good or above.
In accordance with the relevant provisions of the “Supplier Sustainability Management Handbook”, the Supplier Management Department, in collaboration with our recognized audit organizations, conducts regular ESG audits of suppliers we collaborate with. The results are to identify any violations. Based on the assessment results, we can initiate an upgrade process at any time, specifying remedial and corrective measures as well as follow-up audit methods. This initiative aims to promote the improvement of our suppliers’ performance in social responsibility. According to the audit results, some suppliers had violations related with chemical safety, fire safety, overtime hours, overtime pay and other issues. Based on the results, we provided improvement guidance and assisted the suppliers in making corrective action plan on fire prevention, protection of labor rights and other items, required them to complete the rectification on time, and tracked the progress of rectification. In addition, our suppliers empowerment program also provides continual support to the implementation of suppliers’ corrective action plan.
Additionally, we developed the ESG online data collection platform, initiating the collection of ESG environmental data over 200 suppliers. The data covers GHG emissions, energy consumption, water resource management, wastewater and waste management, etc. We require critical suppliers to conduct SLCP audits and utilize the HIGG FEM as a third-party tool to measure suppliers’ environmental performance. Suppliers are required to complete self-assessment and verification within a certain time frame. We also invite suppliers to participate in training courses to help them better understand and apply the assessment tool.
Scope of ESG Audit of Supply Chain
