At Samsung Electronics, we require all of our suppliers to comply with the local laws of their respective countries as well as the Samsung Electronics 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 our suppliers' compliance, we operate an integrated work environment management process consisting of self-assessments, on-site audits, and third-party audits.
We reflect the findings from supplier due diligence in our annual comprehensive evaluations. Following an assessment of risk likelihood and severity, if a supplier is identified as high-risk, it will be subject to a mandatory third-party audit the following year and placed under enhanced supervision. Conversely, suppliers that demonstrate excellent compliance are offered incentives, such as extra points in the comprehensive evaluation1) and monetary rewards. Since 2023, we have operated our Supplier Sustainability Management Reward Program. This program provides incentives, including monetary rewards, to suppliers2) that have demonstrated excellent performance and considerable efforts to improve in the areas of labor, human rights, and environment.
Furthermore, we have expanded 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. We are also continuously increasing the number of second-tier suppliers subject to the third-party audits introduced in 2023 and the on-site audits launched in 2024. 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 extended the existing hotline, originally available to first-tier suppliers, to second-tier suppliers in 2024 to address grievances raised by their workers.