Sustainability

Supply Chain Management

Supply Chain Risk Management

Delta regards suppliers as long-term partners. In addition to competitive quality, technology, delivery time, and cost, which are essential requirements for suppliers, Delta pays attention to suppliers’ governance, environmental, and social aspects. Delta seeks to join hands with its suppliers to jointly promote the sustainable development of the value chain. Through regular risk assessment and identification, suppliers can quickly respond to relevant deficiencies, avoid possible crises, and further strengthen the sustainable supply chain.


Sustainable Supply Chain Management

Delta aims to have key suppliers set targets for "greenhouse gas reduction," "water reduction," and "waste reduction" by 10%, 12%, and 12%, respectively, by 2025. Strategic guidelines include:

  • Set short- and mid-term key targets and formulate specific methods to effectively promote and implement.
  • Regularly identify high-risk suppliers and require them to perform audits and set deadlines for improvement to become medium- or low-risk suppliers.
  • Implement and abide by the supply chain CSR policy, and fulfill the business mission : "To provide innovative, clean and energy-efficient solutions for a better tomorrow."

Supplier energy conservation and carbon reduction targets​

  • The GHG Emissions Reducing Rate of Critical Suppliers

  • The Water Saving Rate of Critical Suppliers

  • The Waste Saving Rate of Critical Suppliers

    2018 is the base year

Supplier ESG Risk Identification

For its 1,042 first-tier and non-production general material key suppliers and 289 second-tier key direct material suppliers, Delta uses tools such as risk maps to identify 186 and 77 potential risk suppliers, respectively, and then identify the risks of labor, ethics, health and safety, environment, and management systems in the supply chain through ESG questionnaires.

According to a resolution of the Supply Chain ESG Committee, high risk factors include: an ESG questionnaire self-assessment average score of less than 70 points, the employment of child labor, failure to comply with Delta's environment-related substances, as well as violations of regulations (on labor, environment, safety and health, or others). With an ESG self-assessment score of less than 70 points and two or more of the above-mentioned high-risk factors, a supplier is listed as a high-risk supplier for the year. Forty-four first-tier and 23 second-tier key suppliers were identified as high-risk suppliers, with a high risk rate of 24% and 30%, respectively.

Supplier Sustainability Management Evaluation Process​

Key Supplier Water Risk Identification

To respond to the water risk in the supply chain caused by climate change as early as possible, Delta has conducted water risk identification for 63 first-tier and 24 second-tier key suppliers in five aspects, namely: hazard, exposure, vulnerability, water consumption, and target reduction, with a weighted scoring of each aspect. Through risk assessment, one high-risk (1.1%), three medium-high-risk (3.4%), 44 medium-risk (50.6%), and 39 medium-low-risk (44.9%) suppliers were identified.

According to the resolution of the Supply Chain ESG Committee, Delta performed audits of the high-risk and the three medium-high-risk suppliers and provided them with professional guidance. Delta required them to submit mitigation and adjustment projects within a time limit to reduce the risk of a water shortage and to prevent the risk of related supply chain disruption.

Conflict Minerals

Delta implements a policy on the non-use of conflict minerals. According to the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas of OECD, it has formulated supplier conflict minerals policies and due diligence guidelines to ensure that Delta’s supply chain respects human rights and is not involved in conflict activities. As of 2019, around 96% of main material suppliers had signed the Declaration of Non-use of Conflict Minerals.

Management Mechanism for Due Diligence Research on Conflict Minerals

Suppliers' Participation in Sustainability

Delta has long collaborated with suppliers in energy conservation and carbon reduction, starting from waste reduction, logistics carbon emission reduction, to application of energy-saving products. The achievements of collective efforts for environmental sustainability are obvious to all as material and operating costs and carbon emissions have been reduced significantly.

  • Packaging Materials Recycling

    Take transformer products as an example: the packaging material recycling rate reached 78%, saving a cost of US$1.762 million. The recycling rate increased in 2019 compared with 2018 because the damage rate of the vacuum formed packaging materials was much lower than that of paper cartons, and the recycling frequency was higher.

  • Repetitive Use of Carriers (plastic frames)

    For example, 73 suppliers for Delta's Dongguan, Wujiang, and Wuhu Plants joined this initiative, saving 2.572 million paper cartons and around US$2.5 million in packaging costs.

  • Pallet Recycling and Reuse

    For example, at the Dongguan, Wujiang, and Wuhu Plants recycling pallets saved US$368,968 in costs. In addition to the pallet recycling incentive of US$19,663, an amount of US$349,305 was saved in operating costs.

  • Green Logistics

    For example, at the DGC plant the total carbon emissions of logistics from the transportation of goods to clients by truck in China in 2019 was 11,256 metric tons of CO2e, and the logistics carbon intensity (metric tons of CO2e/million USD output value) was calculated to be 2.185.

  • Introduction of Energy Saving and Carbon Reduction Products and Solutions

    In 2019, Delta assisted seven suppliers in introducing 1,567 energy-saving products and solutions in 113 product categories.