Conflict Minerals Policy
Coway places human dignity as a top priority, and considers the negative impacts on society, such as human rights violations and environment destruction, during the mining, production and distribution of minerals as a serious problem. To prevent the use of conflict minerals mined unethically, Coway strives to monitor whether raw materials or components it receives contain conflict minerals.
Coway helps raise awareness of conflict minerals by providing guidelines and briefings on the management of conflict minerals for partner companies. Moreover, we will continue striving to expand the policy of not using conflict minerals, and of supplying responsible minerals to other supply chains subcontracted with our partner companies.
Conflict Minerals Management Process
Conflict Minerals Management Process
Coway has established and operated a ‘conflict minerals management process’ and monitors the status of the conflict minerals managed by our partner companies once a year.
Coway holds regular online briefings to raise awareness of conflict minerals, and based on these, we investigate the current status of conflict minerals and identify risk factors.
For the compliance with ‘responsible purchase’, we will continue to strive to improve the management system for our partner companies‘ use of conflict minerals.
01
Raising partners’ awareness
02
Investigating the status of conflict minerals
03
Checking risk factors
04
Monitoring improvements
Increasing Partner Companies‘ Awareness of Conflict Minerals
Coway conducts briefing sessions and training on the background of conflict minerals management, trends of conflict minerals regulations among major countries, our policies on conflict minerals management, CMRT introduction and investigation plans, and whether or not to conduct transactions with RMAP certified smelters for our partner companies that use conflict minerals, in order to raise overall awareness of conflict-minerals management.
In order to comply with the principle of not using minerals mined in ways that cause problems related to human rights and the environment in conflict and high-risk areas, Coway has signed a ‘Pledge to Comply with Non-Use of Conflict Minerals’ with our major partner companies.
Coway is preventing risks related to conflict minerals in advance by requesting not only major partner companies, but also their subcontracted partner companies to comply with non-use of conflict minerals.
Identifying Conflict-Minerals Management Targets
We have requested our major partner companies to submit information on conflict minerals used for all items supplied to Coway. Through this, we enter information on minerals and smelters related to each item into a computer, and request them to submit CMRT reports in order for us to manage conflict minerals.
Coway is working hard to identify partner companies that have a high risk of and relevance to the use of conflict minerals.
In particular, we are aware of the need to manage risks arising from those manufactures specialized in making circuits and electric components. And we have identified minerals used for such items and their origins to check if they are related with conflict areas.
Investigating the Status of Partner Companies‘ Conflict-Minerals Management
Coway has established a conflict-minerals management process in accordance with the Responsible Minerals Initiative (RMI) to actively participate in the international efforts to ban the use of conflict minerals such as 3TG (tantalum, tin, tungsten, and gold).
In order to raise awareness of conflict minerals for partner companies, Coway conducts relevant briefing sessions and training on a regular basis. And we also investigate the status of conflict minerals and smelters used by partner companies through the Conflict Minerals Reporting Template (CMRT) used for collecting information on suppliers provided by the Responsible Minerals Initiative (RMI).
Through the analysis of consistency and risk of CMRT received from partner companies, we request them to comply with the Responsible Minerals Assurance Process (RMAP), and continuously recommend non-certified smelters to obtain certification.
For the compliance with ‘responsible purchase’, we will continue to strive to improve the management system for our partner companies‘ use of conflict minerals.
Conflict Minerals Usage Status Investigation Category (Unit: Number of Companies)
| Category |
Partner companies |
Certified smelters |
| Status of using conflict minerals |
72 |
220 |
Identifying Risk Factors and Monitoring Improvements
Based on the CMRT data submitted by partner companies, we have checked if they were doing businesses with RMAP-certified smelters. For those that did not do businesses with certified smelters, we requested them to implement socially responsible mineral procurement and change their business to instead use certified smelters.
In addition, we will find out and manage the current situation by monitoring whether improvements are actually implemented, so as to operate a responsible mineral-sourcing system.
We will strive to monitor whether our partner companies actually carry out improvements based on Coway‘s conflict-minerals process. And we will also work hard to operate a conflict-minerals sourcing system by reflecting global guidelines in order to strengthen the management of conflict minerals.
Win-win Cooperation
Establishing a Fair Trade Culture
Fair Trade Governance
Coway has established and been operating a watchdog agency against internal unfair trade so as to internalize fair trade guidelines. Coway has formed a Subcontract Transaction Deliberation Committee that includes an executive in charge of subcontracting tasks in order to monitor overall transactions, including unit price changes, made by and with partner companies at least once per month for the 4 major fair trade items that have high risks of violating relevant laws. By establishing a department dedicated to fair trade and appointing persons in charge, Coway monitors the compliance with the guidelines on a regular basis in order to prevent unfair trade risks in advance and create a reasonable and transparent trade culture.
Organizational Chart of the Fair Trade Voluntary Deliberation Committee
Compliance with 4 Major Guidelines for Fair Trade
In order to guarantee rights and interests of partner companies and prevent the abuse of bargaining power by main contractors, Coway has established four major guidelines for fair trade distributed by the Fair Trade Committee for win-win cooperation and has also posted and been managing the relevant document in its integrated purchasing system. By establishing a system to block unfair subcontracting practices, we minimize the possibility of having delayed payments, non-issuance of documents, and other unfair practices. When there are unfair transactions, we receive reports on such transactions within Coway‘s Ethical(Jeong-Do) Management Center. Coway sticks to fair purchasing in all transactions. Coway conducts evaluations to manage the occurrence of unfair transactions regarding ‘the selection of partners and the management of unit prices.’ And we have confirmed that fair selection of partners and unit prices is being made in accordance with internal guidelines. Coway has revised the integrated purchasing regulations and work guidelines in order to prevent risk factors related to subcontracting work by delivering bidding plans in advance and redefining standards on failure in bidding and rebidding.
4 Major Guidelines for Fair Trade
Action agenda for fair selection (registration)
of partner companies
Action agenda for establishment
and operation of the subcontract transaction deliberation committee
Action agenda
for desirable document issuance
and preservation
Action agenda
for desirable contract execution
Fair Trade Guidelines Compliance Activities
Coway has revised its ethics guidelines for the overall purchasing-related work so as to reflect the clarification of compliance with fair trade laws and implementation of ethics training in response to changes in the business environment at home and abroad — where the strengthening of ethical awareness and compliance with relevant laws is important, including corporate social responsibility and improvement of non-financial value. And we get hand-written signatures on the ‘Pledge for Purchasing Ethics Practice Guidelines’ on an annual basis. For ethical compliance of Coway‘s partner companies, we provide ethical management training to ensure fair-trade compliance once per year. By doing so, we strive to inform our partner companies of the disadvantages for not complying with fair trade, to ensure that they can achieve sustainable growth through compliance with ethical management.
Purchasing Ethics, Our Promise Day
Coway‘s Purchasing Department operates the ’Coway‘s Purchasing Ethics Program’ to ensure transparency and ethical responsibility in conducting purchasing activities. All members of the Purchasing Department participate in the ethics training, and each of them signed the Ethics Pledge to comply with ethical purchasing principles. “Ethics of Today! Dignity of Tomorrow!” Coway‘s Purchasing Department will continue to work hard to internalize the awareness of purchasing ethics.
Partner Company Management System
Supply Chain Code of Conduct
As part of responsible management to create a sustainable society, Coway established its ‘Supply Chain Code of Conduct’ in 2017. Coway‘s ’Supply Chain Code of Conduct‘ reflects the UN’s Universal Declaration of Human Rights, * UN Implementation Guide on Business and Human Rights, * EICC Code of Conduct, * RBA Code of Conduct and other global guidelines and labor standards laws. When registering new partner companies and signing standard subcontract agreements, Coway requires them to sign an agreement on compliance with the Supply Chain Code of Conduct. Through an evaluation of supply chain ESG, we evaluate whether the code of conduct has been complied with or not. When global guidelines are updated, we revise the existing guidelines and sign an agreement accordingly. In order for Coway‘s partner companies to take corporate social and environmental responsibilities seriously for a sustainable society and enhance corporate ethics, we review and make decisions on ESG-related issues of our partner companies through the Coway ESG Council and Committee.
* UN Guiding Principles on Business and Human Rights
* Electronic Industry Citizenship Coalition (EICC) Code of Conduct
* RBA (Responsible Business Alliance) Code of Conduct
Process of Selecting Partner Companies
In order to expand transactions with outstanding companies and maintain stable and competitive supply chains, Coway has established criteria for ‘Guidelines for Registration and Evaluation of New Companies.’ And we operate the system of registering and evaluating new companies based on clear evaluation standards. When evaluating a new partner company, its credit rating and cashflow matters should meet the criteria set by the financial evaluation. Regarding the on-site due diligence evaluation, we, together with our relevant divisions, visit the workplaces of our partner companies to review items related to the management, supply chain, including technology, quality, environment, reliability, production and materials. And then, we register only those companies that have a final evaluation score of 70 or more from the 'Partner Company New Registration Deliberation Committee.'
Process of Recruiting and Evaluating New Partner Companies
Status and Purchase Proportion of Major Partner Companies
Considering transaction proportions and amount of money with Coway and supply of core technology parts for Coway products, we select our partner companies. And we provide active support for them to strengthen their competitiveness and technology.
Status of Coway‘s Primary & Secondary Partner Companies
① Primary partner companies (all): Yugu/Incheon/Pocheon factory raw material supply partners and mold partners
② Core partner companies: They are selected considering the size of transactions, irreplaceability, possession of core technologies and others among the primary partner companies.
③ Secondary partner companies: Those who signed a fair trade agreement with primary and secondary partners
Activities to Support Partner Companies
Strategies for Promoting Win-win Growth with Business Partners
Coway has formed an organization dedicated to win-win cooperation to achieve the vision of ‘Establishing a sustainable supply chain partnership created together.’ And we have formed and put into practice 4 core values: (1) Coway that everyone wants to grow together with; (2) Coway that everyone wants to create a future together with; (3) Coway that everyone wants to do business with ; and (4) Coway that everyone wants to coexist with.
Operation of a Division Dedicated to Win-win Cooperation
Support for Management Stability of Partner Companies
Strengthening and Protecting the Technologies of Partner Companies
Supporting Welfare for Partner Companies
Industrial Safety Campaign for Partner Companies
Operating Communication Channels with Partner Companies
Conflict Minerals Management
Conflict Minerals Policy
Coway places human dignity as a top priority, and considers the negative impacts on society, such as human rights violations and environment destruction, during the mining, production and distribution of minerals as a serious problem. To prevent the use of conflict minerals mined unethically, Coway strives to monitor whether raw materials or components it receives contain conflict minerals. Coway helps raise awareness of conflict minerals by providing guidelines and briefings on the management of conflict minerals for partner companies. Moreover, we will continue striving to expand the policy of not using conflict minerals, and of supplying responsible minerals to other supply chains subcontracted with our partner companies.
Conflict Minerals Management Process
Conflict Minerals Management Process
Coway has established and operated a ‘conflict minerals management process’ and monitors the status of the conflict minerals managed by our partner companies once a year. Coway holds regular online briefings to raise awareness of conflict minerals, and based on these, we investigate the current status of conflict minerals and identify risk factors. For the compliance with ‘responsible purchase’, we will continue to strive to improve the management system for our partner companies‘ use of conflict minerals.
Raising partners’ awareness
- Reflecting in shared-growth evaluation Items
Investigating the status of conflict minerals
- Identifying conflict minerals subject to management
- Status of smelters they use
Checking risk factors
- Identifying those certified/uncertified
- Sending official letters to recommend changes
Monitoring improvements
- Sending emails on a quarterly basis
- Checking the conversion to certified Smelters
Increasing Partner Companies‘ Awareness of Conflict Minerals
Coway conducts briefing sessions and training on the background of conflict minerals management, trends of conflict minerals regulations among major countries, our policies on conflict minerals management, CMRT introduction and investigation plans, and whether or not to conduct transactions with RMAP certified smelters for our partner companies that use conflict minerals, in order to raise overall awareness of conflict-minerals management. In order to comply with the principle of not using minerals mined in ways that cause problems related to human rights and the environment in conflict and high-risk areas, Coway has signed a ‘Pledge to Comply with Non-Use of Conflict Minerals’ with our major partner companies. Coway is preventing risks related to conflict minerals in advance by requesting not only major partner companies, but also their subcontracted partner companies to comply with non-use of conflict minerals.
Identifying Conflict-Minerals Management Targets
We have requested our major partner companies to submit information on conflict minerals used for all items supplied to Coway. Through this, we enter information on minerals and smelters related to each item into a computer, and request them to submit CMRT reports in order for us to manage conflict minerals. Coway is working hard to identify partner companies that have a high risk of and relevance to the use of conflict minerals. In particular, we are aware of the need to manage risks arising from those manufactures specialized in making circuits and electric components. And we have identified minerals used for such items and their origins to check if they are related with conflict areas.
Investigating the Status of Partner Companies‘ Conflict-Minerals Management
Coway has established a conflict-minerals management process in accordance with the Responsible Minerals Initiative (RMI) to actively participate in the international efforts to ban the use of conflict minerals such as 3TG (tantalum, tin, tungsten, and gold). In order to raise awareness of conflict minerals for partner companies, Coway conducts relevant briefing sessions and training on a regular basis. And we also investigate the status of conflict minerals and smelters used by partner companies through the Conflict Minerals Reporting Template (CMRT) used for collecting information on suppliers provided by the Responsible Minerals Initiative (RMI). Through the analysis of consistency and risk of CMRT received from partner companies, we request them to comply with the Responsible Minerals Assurance Process (RMAP), and continuously recommend non-certified smelters to obtain certification. For the compliance with ‘responsible purchase’, we will continue to strive to improve the management system for our partner companies‘ use of conflict minerals.
Conflict Minerals Usage Status Investigation Category (Unit: Number of Companies)
Number of 3TG certified smelters (unit: number of smelter)
Number of partner companies using conflict minerals (unit: number of company)
Identifying Risk Factors and Monitoring Improvements
Based on the CMRT data submitted by partner companies, we have checked if they were doing businesses with RMAP-certified smelters. For those that did not do businesses with certified smelters, we requested them to implement socially responsible mineral procurement and change their business to instead use certified smelters. In addition, we will find out and manage the current situation by monitoring whether improvements are actually implemented, so as to operate a responsible mineral-sourcing system. We will strive to monitor whether our partner companies actually carry out improvements based on Coway‘s conflict-minerals process. And we will also work hard to operate a conflict-minerals sourcing system by reflecting global guidelines in order to strengthen the management of conflict minerals.
Supply Chain ESG Evaluation
ESG Assessments in the Supply Chain
Based on Coway‘s Supply Chain Code of Conduct, we have completed the establishment of Coway’s Supply Chain ESG Management indicators. To increase awareness of ESG of partner companies, we have conducted ESG management training for 135 employees of our major partner companies. By conducting self-inspections and on-site evaluations with third-party professional organizations on human rights, labor standards and practices, the environment, ethics and governance, product and service responsibilities, etc., we strive to identify potential supply chain ESG risks and come up with improvement measures with those partners that do not meet certain standards. Coway makes quarterly reports on the status of operating supply chain ESG through the ESG Council.
ESG Assessments in the Supply Chain
Coway Supply Chain ESG Management Indicators
Supply Chain ESG Evaluation Result
Comprehensively considering partners‘ transaction size, irreplaceability and possession of core technologies, we have conducted supply chain ESG evaluations of a total of 68 companies, including self-inspections from 59 of them and written and on-site evaluations from 9 of them. As for the supply chain ESG evaluations, the self-inspections were made by using a third-party professional organization (QESG) platform. And by making on-site visits to partner companies together with Coway‘s supply chain ESG personnel and a professional ESG consulting company, we completed written and on-site evaluations regarding ’human rights, labor standards and practices, environment, ethics and governance, product and service responsibilities‘.
Overall Result
Having an average score of 49.3 in the supply-chain ESG risk evaluations (self-inspections + on-site evaluations), Coway is analyzed to have relatively high capabilities in responding to the ESG management compared to other domestic SMEs and strong medium companies.
* Benchmark: QESG survey and evaluation result data from 2022 to the 1st half of 2023 (approximately 1,700 companies)
Rating Distribution Result
The result of analyzing Coway partners‘ risk-exposure levels and operational management levels shows that many of them obtained the intermediate BBB ratings, followed by A and AA. In general, they were evenly distributed in good ratings compared to other domestic benchmark companies.
* Benchmark: QESG survey and evaluation result data from 2022 to the 1st half of 2023 (approximately 1,700 companies)
Results by Sector
Coway‘s partner companies were found to have good ratings in their management compared to other benchmark companies. In particular, they were confirmed to have better ratings than other small and medium-sized manufacturers in terms of human rights and labor sectors.
ESG Risk Management in Supply Chain
Summary of Top Risks
In general, Coway‘s partner companies were found to be in need of establishing human rights policies, and expanding practical safety and health activities in terms of human rights and labor sectors, to set a long-term reduction goal to manage environmental emissions in terms of the environmental sector, and to establish ethical management systems and expand information disclosure in terms of ethics and governance sectors.
Human rights/labor standards and practices 68.1
“Need to revise human rights policies and managing human rights and labor in supply chains”
Environment 43.6
“Need to set long-term goals to reduce environmental emissions by each factor”
Ethics and governance 39.8
“Need to establish ethical management system and expand information disclosure”
Product and service responsibility 40.9
“Need to identify opportunities”
Improvement Status
Out of 233 items related to Coway‘s supply chain ESG management indicators, we have designated 59 of them (25%) as risk items as they require additional cautions in terms of the ESG management. And improvement tasks were established for 6 high-risk items out of 59. Coway has selected 2 improvement tasks in human rights and labor, 1 in the environment, and 3 in ethics and governance, and has requested companies with identified risks to establish improvement plans. To improve risks of our partner companies, we are actively supporting them by distributing our internal operation materials related to improvement tasks and issuing partners‘ outstanding cases of ESG management. And we also monitor the improvement status of our partner companies until they complete such improvements.