Supply Chain Management

The Code of Practice for Suppliers sets out the CSR requirements every Towngas supplier must follow.

New Suppliers must acknowledge our Code of Practice for Suppliers and Sustainable Purchasing Policy (including health and safety and climate-related requirements) before being added to Towngas’ approved suppliers list. An annual review is conducted to ensure suppliers on the approved list are performing at a satisfactory level that aligns with our purchasing practices, policies, and ESG-related requirements. We reserve the right to exclude any suppliers from contracting if they fail to meet our requirements. Suppliers with poor performance may be required to submit a corrective action plan and will be monitored for three years.

When screening suppliers for procurement, we consider a wide range of criteria, including a company’s background, quality, price, delivery of service and ESG performance.We have also introduced a new methodology with specific Key Performance Indicators (“KPIs”) to enhance the supplier selection process. This approach considers various factors during screening, including cost, the criticality of suppliers, and ESG-related risks relevant to suppliers’ sectors and commodities (e.g., labor conditions, energy consumption, pollution potential, etc.). Preference is given to companies holding related ISO certificates and other documents pertaining to quality, as well as better ESG performance.

In 2023, for our Tier 1 suppliers in Hong Kong operations, we achieved:

To ensure suppliers follow our procurement standards and ESG performance requirements, we request critical suppliers to conduct self-assessment surveys. The self-assessment survey is designed referencing the corporate social responsibility principles encompassed by the SA8000 Standard, the Responsible Business Alliance (“RBA”) Code of Conduct, as well as ESG factors. We assess suppliers based on ESG factors including corporate governance, climate risk management, health and safety, human rights and business ethics. The self-assessment survey received is then reviewed, verified, and analysed to ensure supplier's ESG performance.

Apart from a self-assessment survey to understand how suppliers align with our Code of Practice for Suppliers, selected critical suppliers are evaluated through on-site visits. Additionally, we support suppliers in identifying opportunities to enhance ESG performance, with five receiving assistance in implementing corrective action plans and 13 participating in capacity building programs. External assessment will also be conducted by a third-party independent body to ensure compliance and continuous improvement in line with the methodologies of RBA and Supplier Ethical Data Exchange (“SEDEX”) audit requirements.

At Towngas, we are committed to following 6S² management principles for a safe and efficient workplace. We also promote 6S² practices among our suppliers and support those who follow this methodology for improving efficiency, productivity and product quality, as well as reducing the risk of industrial accidents.

¹Based on the total purchase value of products and materials (Hong Kong operations).
²6S refers to the Japanese words Seiri, Seiton, Seiso, Seiketsu, Shitsuke (which mean Sort, Set in order, Shine, Standardise, Sustain) and Safety

Towngas conducted supply chain resilience assessment by combining desktop research results with our own supply chain management experiences to understand the potential risks. We identified key measures to improve our supply chain resilience and mitigate these risks, including:

• Diversifying the supply chain through multi-sourcing
• Advancing digital technologies to improve efficiencies
• Achieving full supply chain visibility
• Monitoring suppliers’ greenhouse gas (GHG) emissions

Our Sustainable Purchasing Policy spells out the environmental considerations that should be taken into account in every purchasing decision, including the process of procuring services and evaluating product specifications.

We are one of the founding members of the Sustainable Procurement Charter launched by the Green Council, and our procurement decisions and processes are in compliance with the ISO 20400 Sustainable Procurement Guidance as verified by the British Standard Institution (BSI). Making reference to ISO 20400, we have adopted the Life-cycle Costing (LCC) methodology to ensure that the products and services we purchase achieve value for money, with the lowest negative environmental impact and most positive social results. The total costs of the goods and services we procure are estimated over their lifespan, rather than just their capital costs. We also take into consideration future costs such as energy use and maintenance costs.