Supplier Sustainability Management Handbook

Sustainable Development 9 Chapter 3 Audit Requirements Enhancing factory conditions and improving the social responsibility of the supply chain are key components of Bosideng's commitment to global compliance, corporate governance, and business ethics. We require all suppliers to strictly comply with Bosideng's relevant standards and fully adhere to the national laws, regulations, and applicable international conventions of their operating locations. To continuously strengthen supply chain ESG management, Bosideng adopts a combination of internal audits and external independent third-party audits, conducted by the ESG team and its designated auditing agencies, to systematically assess suppliers and their factories in ESG-related areas such as labor management, working environment, environmental compliance, and business ethics. In addition, to encourage suppliers to actively promote their own ESG capability building, Bosideng has established a clear performance guidance mechanism to provide corresponding incentives as well as to support suppliers with excellent ESG performance. In the Group's supplier admission and cooperation evaluation, labor management performance is regarded as an evaluation factor equally important as price and quality, and suppliers with outstanding performance in human rights and labor, as well as mature management, are prioritized. 3.1 Purpose of the Audit The ESG audit aims to continuously promote suppliers and their production factories to adhere to Bosideng's management standards, while demonstrating the positive value of responsible operations for business sustainability. The audit focuses on the following aspects: • Assess new factories: Evaluate whether they have the management foundation and execution capabilities necessary to consistently meet the Company's ESG standards; • Oversee existing plants: Ensure ongoing compliance in operations and drive continuous improvement in their ESG performance; • Identify non-compliance: Identify situations that do not conform to standards, relevant laws, regulations, and practices; • Assess compliance: Conduct a comprehensive assessment of the factory's compliance level and areas for improvement across all audit areas; • Investigate unauthorized subcontracting: Identify and investigate any unauthorized subcontracting activities; • Discover best practices: Discover and promote exemplary sustainable operating practices within the industry and supply chain. Additionally, audits are performed to confirm the operational transparency of suppliers and their production facilities. These audits require suppliers to submit complete and accurate documentation. 3.2 Audit Process Audits are conducted by Bosideng's internal audit team or its designated third-party audit agencies, and are categorized into three types: announced, semi-announced, and unannounced.