Supplier Sustainability Management Handbook

Sustainable Development 12 the existing five-level supplier grading management system: S, T, I, A, and B. Based on our ESG audit results, suppliers will be rated as A, B, C, D, or X (A being the best and X being the worst), and this rating will serve as an important basis for supplier business evaluation. Suppliers with ESG audit ratings of D or X will be subject to enhanced monitoring. A: No zero tolerance issues or critical non-conformities were identified. B: No zero tolerance issues were identified, with no more than one critical non-conformities. C: No zero tolerance issues were identified, with no more than two critical non-conformities. D: No zero tolerance issues were identified, and there are three or more critical non-conformities. X: Zero tolerance issues were identified. 3.5.2 Rectification Plan During the annual review, if any zero tolerance issues are identified, the supplier will be issued a formal warning in the supplier management system. A time frame of 15-30 working days will be set for rectification, and the procurement department will be notified. If the rectification is not completed by the deadline, the supplier exit procedure will be initiated, leading to termination of cooperation. Cooperation can continue if the Supply Chain Management Center confirms that the rectification is completed satisfactorily. During the annual review, if high-risk issues are found, the supplier will be notified and given a specified period of 15-30 working days to rectify them. If rectification is completed on schedule and confirmed, it will not affect the current cooperation. Failure to complete the rectification will be an important basis for downgrading the business rating.