Management of the Supply Chains

Management of Suppliers

CSC established the Code of Conduct for its suppliers, with which qualified suppliers should comply.

In order to enhance the management of the supply chains, the following anti-corruption clauses are stipulated in the contracts signed between CSC and suppliers in its supply chains:
The supplier guarantees that the tender price will not include bribes, gifts, commissions, remunerations, gratuities or other improper benefits, and that the aforementioned items will be paid to managers, employees, part-time employees appointed by CSC, or their spouses, immediate family members or consultants in connection with the tender.” In case of any violation, the supplier shall be liable for all damages. In the event of any serious violation, CSC may cancel or terminate all other contracts signed with the supplier. CSC will temporarily suspend its dealings with suppliers who violate ethical principles and urge them to make improvements before resuming its dealings with them. According to the statistics for quarters1 to 4, 2023, CSC had suspended dealings with 1 supplier who had violated the ethical principles according to the Purchasing Department Directives for Violations of Integrity Principles by Suppliers.

In addition to establishing the Code of Conduct for its suppliers, CSC has set short-, medium-, and long-term goals for the management of suppliers, which are stated as follows:

Short-term

The number of suppliers accepting the Supplier Code of Conduct in 2023
≥ 2,550

Medium-term

The number of suppliers accepting the Supplier Code of Conduct in 2025
≥ 3,700

Long-term

The number of suppliers accepting the Supplier Code of Conduct in 2030
≥ 4,500

The hotline to report incidents of corruption, solicitation of bribes and frauds, which has been specified in Article 14 of the “Suppliers' Quotation Notice,”

CSC is a wholly-integrated steelmaker, and the quality and delivery dates of raw materials are extremely important. Therefore, the Purchasing Department has established a regular follow-up and inspection management mechanism for a supplier’s return rates and the number of overdue delivery cases based on the results of the supplier’s execution of contracts. A supplier whose quality of delivery does not meet the requirements in the contracts or who has failed to deliver materials on time as contracted will be given a written warning, a suspension of quotations, or a suspension of trading depending on the severity of the cases.

Categories Equipment and materialsNote Transportation Contractors
(Equipment Maintenance)		 Total
Total numbers of suppliers 2020 32,256 99 669 33,025
2021 32,829 109 702 33,641
2022 33,234 160 735 34,130
2023 40,854 128 732 41,714
The numbers of suppliers with risk-based audits 2020 13 35 73 122
2021 13 38 74 126
2022 2 40 77 120
2023 1 35 82 118
The amounts of purchase from suppliers with risk-based audits as a percentage of those of the annual purchase 2020 13.2% 85% 59.7% -
2021 13.1% 87.6% 60.2% -
2022 9.25% 85.15% 68.1 -
2023 0.15% 77.01% 70.60% -
The numbers of suppliers with on-site audits 2020 13 90 62 166
2021 13 124 74 212
2022 2 102 97 202
2023 1 92 211 304
The numbers of on-site audits 2020 13 1,705 6,360 8,090
2021 13 1,760 7,596 9,381
2022 2 1,720 10,026 11,760
2023 1 1,704 9,278 10,983

The number of on-site audits of suppliers referred to the on-site inspections carried out by auditors on higher-risk projects undertaken by the Plant Engineering & Maintenance Department. As the auditors, centralized from the second-echelon units, were managed by the first-echelon units, the efficiency of on-site audits could be enhanced.

ESG Program

The Supplier Code of Conduct of CSC (China Steel Corporation) consists of five parts: (A) Ethical, (B) Labor and Human Rights, (C) Health and Safety, (D) Environmental Standards, and (E) Management Systems, encompassing various aspects of ESG (Environmental, Social, and Governance) issues. After approval and signing by the General Manager of CSC, the Code is publicly disclosed on the CSC ESG Zone. Through regular monthly meetings, the Governance and Sustainability Committee, directly reporting to the Board of Directors, oversees its implementation, aiming for supplier partners to jointly focus on sustainability issues with the company.

In 2023, building on this Code, CSC initiated self-assessment requirements for major suppliers (i.e., raw materials) based on whether their practices align with CSC's Supplier Code of Conduct (i.e., compliance with the company's ESG policies). Clear responses are requested to assess risks associated with these suppliers, following the outlined process.