Responsible Sourcing
Supplier Screening and Selection
We undertake due diligence on our suppliers to ensure they meet our ESG criteria and identify any potential risks or areas for improvement. Our supplier screening (evaluation and selection) process for new vendors is comprehensive and involves ensuring ESG compliance in accordance with the Supplier Code of Conduct. Suppliers must comply with all the business and ESG requirements which specify our standards for human rights, labor practices, health and safety, environmental protection, business ethics, and anti-corruption. Selection of suppliers is based on their ESG performance and business relevance, which is periodically reviewed by Indorama Ventures.
Supplier Risk Assessment
We classify our suppliers into high, medium, and low ESG risk categories based on assessments of their business relevance, quality management, geographic location, product category, and ESG performance as well as GHG emission data. The assessment on country-specific risk, sector-specific risk, and commodity-specific risk are considered for Critical suppliers and Tier 1 suppliers. It evaluates criteria such as the type of raw material, country of origin, regulatory requirements, specific certifications, ethics and reputation, spending, and business continuity in the event of a supply disruption.
This process, applicable to raw material and critical non-raw material suppliers, for existing suppliers and potential new suppliers (due diligence), involves a systematic and harmonized approach, requesting that suppliers respond to a self-assessment questionnaire, via our own evaluation and EcoVadis result, that assists in assessing opportunities and ESG risks relating to the environment, health and safety, human rights, child and forced labor, regulatory compliance, business ethics, anti-corruption and improving a sustainable supply chain. We prioritize our high-risk suppliers for further monitoring and engagement including audit according to corrective action plans, as well as update their risk status regularly based on their business relevance and ESG performance improvement or deterioration.
2024 Assessment
- No significant business –related or ESG-related risks were identified among our Tier 1 suppliers, which comprise raw material suppliers and critical non-raw material suppliers.
- 100% of raw material suppliers and critical non-raw material suppliers were assessed based on human rights-related and labour-related risks.
- No key raw materials and critical non-raw materials suppliers were identified as human rights-related and labour-related risks.
- No key raw materials and critical non-raw materials suppliers were specified as being exposed to the risks of incidents of child, forced, and compulsory labour.
- No complaints concerning human rights in the supply chain were submitted through the grievance reporting system.
Addressing on the company’s awareness on ESG in its supply chain
As sustainability has prevailed and been raised globally, Indorama Ventures responds to the changing trend by clearly addressing ESG awareness and consciousness in the entire supply chain to ensure its sustainability-oriented process. Indorama Ventures has developed a comprehensive policy on its way to world class sourcing with a focus on sustainability. The company systematically integrates sustainable initiatives into not only supply chain strategy, but also its holistic business thinking.
Indorama Ventures committed in compliance with environmental standards included ESG in legally binding agreements with key suppliers.
Apart from our corporate-level approach, Indovinya, one of our business segments, has developed Supplier Relationship Management, which establishes a way of working that considers not only price and quality but also ESG (Environmental, Social, and Governance) elements in evaluating supplier performance. This will help in outlining actions to improve suppliers' processes.
Additionally, Indovinya has actively engaged suppliers in reducing greenhouse gas (GHG) emissions, setting a specific target for Scope 3 emissions, which includes those originating from sources not directly controlled by Indovinya, such as supplier activities. The goal is to reduce absolute Scope 3 emissions (category 1) by 15% by 2030. To achieve this, we will collaborate closely with strategic suppliers, partnering to identify and implement innovative solutions that reduce emissions through process enhancements, product improvements, and other measures. This collective effort is key to driving meaningful decarbonization across the value chain.
Strengthening Sustainable Supply Chain Commitments and Fair Supplier Practices
The company communicates its long-standing strategic commitment to sustainability through a comprehensive supply chain approach, both internally and externally. Internally, we ensure that sustainability principles are embedded across our operations—from upstream to downstream processes. Externally, we align our engagements with suppliers and stakeholders with the same commitment to responsible and sustainable practices.
As part of this commitment, we also promote fair business conduct through transparent procurement practices and responsible payment terms. We strive to ensure that our suppliers—particularly small and medium-sized enterprises—receive payments on time, in line with our standard practice, which sets an average payment term of 60 days. In 2024, the average trade payment period for our business operations remained consistently at 60 days. This reflects our business ethics and respect right of suppliers, and supports supplier cash flow, fosters long-term collaboration, and reflects our broader goal of building a resilient, inclusive, and sustainable supply chain.
Innovating sustainable and environmentally-friendly supply chain
The sustainable approach will be developed and innovated through engagement and support of Indorama Ventures's suppliers and partners. An efficient supply chain is vital for businesses to deliver their products to the consumers. As the global marketplace continues to evolve, supply chain management needs to be enhanced to be more innovatively and proactively to balance product flow and costs throughout a product's life cycle. We believe that innovation can greatly impact supply chain performance through product design, sourcing materials including sustainable sourcing of renewable raw materials, substitution of raw materials based on fossil fuels with natural or bio-based raw materials1, raw materials with low toxicity, manufacturing products.
1Indorama Ventures is monitoring best practice and reviewing studies and will pursue opportunities to substitute raw materials based on fossil fuels when the overall sustainability case for substitution is clear from GHG, human health, and biodiversity perspectives.
Green Procurement: Green procurement is defined by the European Commission as a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life cycle when compared to goods, services and works with the same primary function that would otherwise be procured
Green Logistics: The EU describes green logistics as the management of logistics processes and supply chain activities in a way that minimizes negative environmental impacts. This involves a combination of strategies and practices that reduce emissions, energy consumption, and the use of resources while increasing the efficiency and sustainability of transportation, warehousing, and distribution operations.
Sustainable and Green Procurement
Indorama Ventures always strives to utilize environmentally and socially responsible materials, products and services which are high performance, safe and lasting in value. We understand every product’s life cycle impact on the environment and human health with an aim to:
- Encourage sustainable consumption
- Reduce its impact on the environment and human well-being
- Support sustainable long-term markets for recyclable materials
- Contribute to sustainability through community and societal progress
We are achieving further reductions in emissions by consuming renewable energy (biogas, biomass and renewable electricity) in our operations and are considering increasing the use of renewable electricity, both onsite (rooftop and ground-mounted) and offsite (virtual power purchase agreements). These sustainable business decisions help us better manage our resources, improve efficiencies, achieve greater savings and accurately forecast future costs. In 2024, we procured more than 200,000 tons of bio-based raw materials (Bio-MEG, PLA and cellulose) for our bio-PET, biopolymers PLA, and tire cord fabric production. We also sourced and recycled 396,666 tons of post-consumer PET bottles and materials.
Local Sourcing and Procurement
Regarding the consideration of GHG Scope 3 emissions, we prioritize local sourcing and procurement from local suppliers to support our business operations. This not only encourages local economic opportunities and growth, but also directly contributes to reducing emissions and costs, helping us meet our sustainability goals. We aim to set targets for Scope 3 emissions in activities related to supply chain management in the categories of “Purchased Goods and Services” and “Upstream Transportation and Distribution.
Outreaching sustainability to external stakeholders, communities, and societies
We have engaged with some of our key suppliers to join hand on the sustainable supply chain management as well as responsible consumption with the Scope 3 emission reduction ambition. This initiative will leverage all players in value chain to achieve our and their sustainability goals on GHG emissions, and also serve our climate strategy.
Evaluating and managing risks
The company continuously evaluates and manages risks across end-to-end supply chain for development and implementation of effective business risk strategy. Indorama Ventures ensures that all emerging risks will be properly mitigated through developed diagnostic tools, mechanisms and resources dedicated to the resilience of industrial systems and the environments in which we operate.
Ongoing process of continuous improvement of the company’s supply chain
The company makes sure that we will maintain our management in an environmentally responsible manner. We will continuously identify and manage to improve our practices processes and products to reduce their risk and impact throughout the product life cycle. We will also seek opportunities to make our new and existing facilities inherently safer.
Palm oil and Palm Kernel Oil Traceability - Mills List
There are social, environmental, and economic challenges associated with palm oil and palm kernel oil production. The Roundtable on Sustainable Palm Oil (RSPO) is a non-governmental organization (NGO) that develops and implements global standards for the sustainable palm oil and palm kernel oil chains. Indorama is a member of the RSPO. In support of the causes it protects, we have established a Responsible Sourcing Policy for palm oil, palm kernel oil and derivatives. This policy sets out specific requirements for suppliers of this renewable raw material that is so important for our business. Indorama strives to increase the transparency of its palm derivatives supply chain.
