We require all of our suppliers to comply with the local laws of their respective countries as well as the Samsung Supplier Code of Conduct based on the RBA Code of Conduct in relation to labor and human rights, environment, health and safety, and ethics. To ensure compliance, we operate an integrated work environment management process1) consisting of self-assessments, on-site audits, and third-party audits. We reflect the findings from on-site audits and third-party audits in the annual comprehensive evaluations and policy improvements for the following year, and provide benefits to those suppliers rated outstanding, such as extra points in the comprehensive evaluations2) and cash rewards. Since 2023, we have operated our supplier sustainability management reward program. This program provides incentives, including cash prizes, to suppliers3) that have demonstrated excellent performance and considerable efforts to improve in the areas of labor and human rights and environment.
The Partner Collaboration Center, Vendor Management Improvement Task Force, Global Technology Research, and each subsidiary's dedicated organizational unit are responsible for ensuring the day-to-day implementation of the human rights policy within our supply chain. Key Performance Indicators (KPIs) for management and working-level staff in relevant departments include improving supplier sustainability management, preventing and mitigating forced labor, and disclosure of information. Meeting these targets directly impacts their compensation, including salaries and bonuses.
We manage human rights risks at the company level through the Labor and Human Rights Council2), a consultative body that meets monthly. This council consists of executives and working-level staff of the eight organizational units (People Team, Corporate Legal Team, Partner Collaboration Center, Vendor Management Improvement Task Force, Global Technology Research, Corporate Sustainability Center, Global EHS Office, and Investor Relations Team). We discuss issues of greater magnitude in the Sustainability Council. To improve suppliers’ work environments and labor and human rights records, our company-wide Labor and Human Rights Council2) addresses topics such as supplier policies, due diligence, and remediation of supplier employees, etc.
Samsung Electronics is expanding our management scope beyond first-tier suppliers to also include second-tier and non-manufacturer suppliers. In 2024, we have updated the Supplier Code of Conduct, requiring first-tier suppliers to conduct due diligence on their sub suppliers. This makes them responsible for improvements through the implementation of RBA standards or standards provided by Samsung Electronics to the extent that it does not violate the laws of the relevant country. The third-party audits for sub suppliers, introduced in 2023, continue to expand their target. When critical issues are identified at sub suppliers, we collaborate with first-tier suppliers to monitor the situation until corrective actions are completed. In addition, we have extended the existing hotline, originally available to first-tier suppliers, to second-tier suppliers to address grievances raised by their workers.