Central Pattana : Sustainable Supply Chain Management

Sustainable Supply Chain Management

Supplier ESG Program

Central Pattana has put in place an approach and procedures to enhance an effective internal implementation of the supplier ESG program through the responsible of procurement team headed by Head of Procurement Strategy and directly report to Chief Financial, Accounting and Risk Management and Officer Chief Executive Officer Head in order.

Various supplier ESG programs have been implemented to uplift the suppliers' ESG performance,

ensuring the responsible business operation across value chain. The ESG programs include:

• Continuously reviewed of purchasing practices. This is to ensure an alignment with the Company's Suppliers Code of Conduct and to avoid any potential conflicts that might be happen to ESG requirements.
• Pre-qualifiedvendor assessment. All new and prospective vendors are required to perform self- assessment questionnaire. The questions cover various aspect of ESG performance prior to an approval.
• Conduct a Vendor Quality Evaluation. This assessment is to review weather suppliers' tasks are aligned with the Company requirements and regulations, including ESG aspects. The assessment is conducted every 6 months.
• Consider blacklisting or exclude suppliers from contract awarding if they failed a Vendor Quality Evaluation, cannot achieve either minimum ESG requirements, or submit corrective action plans within a set timeframe.
• Consider preferring supplier with better ESG performance for supplier selection and contract awarding.
• Conduct training for employees who are buyers and other relevant internal stakeholders whose job is related to sustainable supply chain management.

Supplier Screening

Central Pattana has in place a systematic supplier screening approach to identify significant suppliers. The aspects of supplier screening are business relevance, governance, social, and environment dimensions, the company also considers direct business-related risks, including:

1. Development/Construction Suppliers: This includes procurement and contracting for contractors, subcontractors, and construction equipment.
2. Operational Suppliers: This includes consumer goods and services within shopping centers and offices, as well as strategic contractors such as housekeepers, security personnel, gardeners, and technicians.

For identifying the Company's significant suppliers are conducted based on factors such as spend analysis, alignment with the company's sustainability policy and frameworks, sole source of commodity/service in the market, labor practices, responsible for society and environment, etc. In addition, we also consider country-specific,sector-specific, and commodity-specific risks, for example, child and forced labors, health and safety, availability of building material, compliance with environmental standard, etc.

Supplier Screening of 2022	Amount of Supplier	% of total spend
Total number of Tier-1 suppliers (Spending: more than	56	57%
Baht 10 mn)
Total number of significant supplies in Tier-1	9	8%
Total number of significant suppliers in non-Tier 1	31	3%
Total number of significant suppliers (Tier-1 and non	40	11%
Tier-1)

Supplier Assessment

Central Pattana has in place a process for supplier assessment which includes:

• Self Assessment Questionaries which supplier are requested to provide information and supporting evidence regarding their ESG policies, practices, performance.
• On-siteassessment by both the Company procurement team (2nd party assessment)to evaluate important business partners with high-levelimpact risks and by other auditing party (3rd party assessment), in case of encountering a report of operations that does not comply with ESG standards or the ethical principles of a business partner.
• To evaluate important business partners with high-level impact risks, onsite auditing is conducted. This auditing process involves both second-party assessments conducted by the company's procurement department and third-party assessments conducted by external agencies, in cases where reports indicate non-compliance with ESG standards or the Suppliers Conduct of Conduct.
• Suppliers whose assessment score is lower than set target are required to submit a corrective action plan.

Performance of 2022

• Central Pattana conducts ESG assessments for every suppliers, achieving a 100% completion rate through self-assessment forms. Additionally, the company develops plans for key suppliers to enhance their work processes, with a total of 5 partners involved.

• There is one supplier that has an onsite assessment to evaluate their sustainability policies, production processes, and readiness for product delivery. There are six construction contractors or 100% of our contractors underwent the audits. In addition, regular inspections are performed by relevant departments through the program Service with the Heart to review safety and ethical recruitment and hiring practices as well as the performance of workers hired by outsource contractors for shopping center management. This year, we conducted pre-job inspections on 41 outsource contractors onsite. Total of 48 suppliers that have onsite assessments.
• There is one supplier who submit an improvement plan to the Company. In addition, the meeting is held for discussion and seeking for solution together as well as monitoring to ensure that corrective action has been aligned with the submitted plan.Including, the contractor will receive a Safety Improvement Report - SIR, which includes a corrective action plan, to implement. 60 SIRs were issued to the contractor of the Central Chanthaburi project who already completed all corrective action plans.
• The Company commits to select and use the material with least impact on environment and enhance local economic development with local supplier selection.

For the year 2023, in addition to achieving the goal of assessing 100% of business partners on ESG aspects, Central Pattana plans to assess vendors who has significant impact to business in each region separating by category, i.e., contractors, suppliers regarding marketing media. The Company will select 40 significant vendors from 5 regions to participate in supplier development program.

The company is committed to selecting and using materials with minimal environmental impact. It also aims to promote local economic development by prioritizing local procurement and contracting.

Supplier Assessment	2022
Total number of suppliers	4,117
Total number of suppliers assessed the assessments	96%
	More than 97% of suppliers received
	an A grade with no suppliers scoring
	less than a C rating.
Total number of suppliers with substantial actual/potential negative	48
impacts who assessed via desk assessments/on-site assessments
% of suppliers with substantial actual/potential negative impacts	100%
(Achieving the goal of assessing
who assessed via desk assessments/on-site assessments
100%)
Total number of suppliers supported in corrective action plan	61
implementation
% of suppliers assessed with substantial actual/potential negative	1.48%
impacts supported in corrective action plan implementation

Total number of suppliers supported in corrective action plan	1.60%
implementation additionally, the company develops plans
Number of suppliers with substantial actual/potential negative	0
impacts that were terminated

Supplier Development

To promote sustainable supply chain development and educate the Company's supplier, Central Pattana has put in place development process approach which cover the following elements:

• Conduct a training for the Company's suppliers regarding ESG knowledge to raise an awareness and ensure the responsible business operation in an alignment with CPN's Supplier Code of Conduct.
• Support suppliers through collaboration for further improvement or corrective action.
• Conduct an in-depth support programs to build capacity and ESG enhancement, for example, implementation to reduce waste from material and construction site, applying more renewable energy usage,

Performance of 2022

Capacity Building Program	2022		Target for 2022
Total number of suppliers in capacity building programs	40		35
% of significant suppliers in capacity building programs		100

Environment

Utilizing Building Information Modeling (BIM) to create digital models of underground structures and design facility management and retail stores to improve design precision and the efficiency of store expansion or modification planning.

Using crushed aggregate from concrete piles as temporary road surfaces in Central Eastville and creating Recycled Concrete Aggregates (RCA) from waste concrete as a replacement for natural aggregates for road construction in Central Nakhon Pathom. The recycling of 2,200 tons of concrete piles contributed to a GHG reduction of approximately 218 tCO2eq.

Utilizing the most of food waste and leftovers by training construction workers on how to properly sort their food waste and produce fermented effective microorganisms or EM fluid in their living quarters to prevent odor problems in the construction sites. The initiative has been expanded to composting by feeding food scraps to worms and turning it into a rich soil conditioner, which is used in the project sites as well as sold to farmers. The money earned from selling the surplus is used to buy rice, milk and stationery for students in the surrounding communities and workers in the project sites.

Implementation of Reduce Reuse Recycle:

• Reusing temporary partitioning from Central Chanthaburi in the Central Ramindra renovation project.
• Reusing metal sheets from Central Chanthaburi in the Central Nakhon Pathom construction project.
• Transporting excavated soils from the Central Nakhon Sawan construction project to other project sites for backfilling.
• Turning 20 shipping containers into temporary offices and living quarters for workers in the Central Nakhon Pathom construction project site.
  Using alternative energy - solar energy
• Installing solar carports that can shield the entire parking facility of Central Chanthaburi and for small sections within the parking spaces as a pilot initiative that would become the standard for other shopping center projects.
• Progressing a solar lighting upgrade initiative that would become the standard for all new projects, by installing solar lighting systems, which power 50% of all street lighting and illuminations in Central Westville, Central Nakhon Pathom and Central Nakhon Sawan.

Social

Human rights considerations We have established strict measures for labor registration and inspection of illegal employment. Any construction site that employs migrant workers is required to register their workers with the province where the site is located and provide proper documentation to the project manager. Spot checks are conducted on a regular basis by a consulting team hired by Central Pattana as well as the provincial employment offices. In 2022, all migrant workers employed by 15contractors were legally registered. Of this, 17% were Cambodian, 18% were Burmese and 0.6% were Laotian, respectively.

Safety considerations We have established safety and environmental measures at construction sites and expect all our contractors to maintain strict compliance. Construction management consulting firms are hired to monitor compliance and perform periodic inspections. If a problem is detected, the contractor will receive a Safety Improvement Report - SIR, which includes a corrective action plan, to implement. In 2022, 60 SIRs were issued to the contractor of the Central Chanthaburi project who already completed all corrective action plans. While minor accidents occurred at the construction sites, they resulted in little or no damage and we reached 5.8 million hours without a reportable accident in all construction and renovation projects underway this year.

Others

• Incorporating energy efficiency considerations including reduction of greenhouse gas emissions as a selection criterion for high efficiency transformers, which were then purchased in bulk for several projects at a time.
• Preparing the Procure-to-Pay system for trial by business development and construction's Purchasing / Procurement.

For more information on how we are co-creating value and innovation with our suppliers, please refer to page 134 in Central Pattana's 2020 Annual Report and

page 130-133 in Central Pattana's 2021 Annual Report as well as on our website at Supplier | Central Pattana (CPN)