The construction industry represents a highly complex, highly specialized, and highly integrated sustainable sector. Constructing towering structures from ground level requires comprehensive interface integration and collaborative coordination among diverse teams. Following acquisition of each valuable land parcel, effective utilization, planning, and construction within building regulatory frameworks constitutes a sophisticated discipline. Kedge Construction systematically and precisely delineates responsible components and construction sequences between suppliers and construction operations, maintaining on-schedule delivery, cost optimization, and quality assurance as paramount standards. From raw material quality management to comprehensive project timeline planning, all processes undergo detailed documentation and monitoring to achieve maximum efficiency, consistent quality, transparent policies, and establish collaborative partnerships with suppliers, creating mutually beneficial and high-standard engineering outcomes.
Raw Material Procurement Policy
As for the raw materials required for each construction site and project, we collect data and classify it in advance to make an estimate through big data analysis, and then purchase materials sequentially in stages or at one time to cut down cost expenses. We select local materials. To assure our customers, we strictly control the quality of materials and comply with various laws and regulations, and give priority to the use of raw materials with various energy label certifications.
We outsourced a total of 593 procurement projects, all of which were won by Taiwanese suppliers (100%).
Response to energy conservation and carbon reduction and green procurement
Energy conservation and carbon reduction are now a universal consensus. Starting in 2023, Kedge established a requirement that material suppliers must demonstrate active ESG practices―such as conducting greenhouse gas inventories or publishing sustainability disclosures. We mandated that at least 50% of annual material procurement contracts meet these criteria, with the target raised to 55.10% for 2025. In active alignment with green energy, environmental protection, and circular economy principles, Kedge prioritizes water-saving, energy-efficient, green building-certified, eco-labeled, and carbon footprint reduction-labeled materials in accordance with client specifications and Ministry of Environment guidelines. We have also progressively transitioned our fleet toward electric scooters and electric vehicles. Our goal is to achieve continuous year- over-year growth in both green procurement expenditure and proportion relative to the previous three-year average. However, due to a higher concentration of civil engineering projects in 2025 and the policy transition in 2023 that redefined green procurement metrics around carbon footprint reduction labels, the goal was not fully met for the year. Beginning in 2025, Kedge mandated the adoption of Portland Limestone Cement (PLC) concrete across all newly developed projects. Beyond scaling the application of low-carbon building materials, this initiative aligns upstream and downstream industry resources to drive a broader supply chain transition. By establishing a benchmark for PLC utilization in Taiwan’s construction sector, Kedge reinforces its steadfast commitment to driving green, sustainable practices.
• Note: We placed a total of 49 material procurement orders, and 27 suppliers met the ESG requirements, accounting for 55.10% > 50%.
Procurement status of main raw materials
Water- and Energy-Saving Calculation Methodology
Supply status of main raw materials
The main raw materials we require include rebars, cement, ready-mixed concrete, tiles, aluminum windows, steel structures, etc. Unless in the case with the supply provided by the client as specified in the contracts, we purchase all raw materials on our own. Based on the needs for actual materials used in the various construction projects, we sign procurement contract with each supplier to clarify the project requirements and the relevant responsibilities, so as to grasp the source of materials. In particular, when purchasing key materials such as rebars and steel plates, we first compare the price of the materials with the domestic market prices and then decide to purchase them in large amount, to ensure the quality of raw materials and reasonable prices. We estimate the costs of the remaining bulk materials and manpower for the second half of the year every six months, as per international economic trends and fluctuations, and perform dynamic analysis every quarter, to bid for new projects and control costs.
Supplier Classification
Kedge has established a systematic supplier categorization mechanism, classifying vendors into three management tiers based on annual procurement spend. We prioritize management resources for “Tier 1 Suppliers”―those representing high procurement expenditure or operating in high-carbon industries (such as ready-mixed concrete and rebar)―to enhance supply chain resilience and sustainability.
For these Tier 1 partners, we actively track their ESG commitments and implementation progress through ad-hoc site visits, on- site inspections, and in-depth interviews. Furthermore, core indicators including human rights protection, waste management, and occupational health and safety are integrated into our Supplier Evaluation System to ensure sustainability standards are rigorously enforced across active project sites.
To further empower suppliers in their sustainable transition, Kedge, in collaboration with the Taiwan Construction Research Institute (TCRI), published the “ESG Implementation Operational Guidelines for the Construction Industry.” This guide offers a structured framework for corporate sustainability disclosures, helps partners stay ahead of industry ESG trends, and provides actionable recommendations to accelerate the adoption of ESG practices across the construction sector
Evaluation Mechanism Strengthens Sustainable Engineering Quality
Kedge Construction undertakes diverse and large-scale engineering projects throughout Taiwan, encompassing hospitals, technology manufacturing facilities, buildings, and bridges. With deep understanding of the differences and specialization requirements across various professional domains, the company recognizes suppliers as critical partners in achieving engineering excellence. The company has established standardized evaluation and assessment protocols, emphasizing engineering experience and professional competencies from the initial supplier selection phase, while conducting regular performance reviews and management oversight post- contract execution to ensure sustained adherence to high-quality standards. Prior to material and equipment delivery, comprehensive communication and collaborative planning with partner vendors establishes strong cooperative relationships founded on integrity and mutual trust. Through systematic management frameworks and performance-driven replacement and development mechanisms based on evaluation outcomes, Kedge Construction has successfully established a stable, high-quality supply chain that strengthens schedule and cost management while demonstrating unwavering commitment to engineering excellence and sustainable development.
Kedge Construction’s suppliers include
Ethics Agreement Signing
Starting in 2019, contracted vendors have been required to sign ethical agreements, and the requirement of signing ethical agreements for 100% contracted vendors was added into ISO operational specifications in 2023. In 2025, a total of 656 ethical agreements (from 100% contracted vendors) were signed. As a publicly listed company, Kedge upholds integrity in business and requires suppliers to specialize in their techniques and complete work with a sincere and pragmatic attitude. Therefore, when we sign each contract, an affidavit is attached, and the contract clearly specifies the requirements on environmental protection, occupational health and safety, or labor rights to regulate both parties’ conduct and allow Kedge to break through the stereotype of the traditional construction industry.
Greenhouse Gas Inventory Clause
In response to climate change, we add to the contracts with suppliers the clauses with regard to the Greenhouse Gas Inventory “Party A must disclose greenhouse gas inventory information year by year in accordance with the FSC’s “Sustainable Development Roadmap for TWSE/TPEx Listed Companies.” For facilitating Party A to calculate the annual greenhouse gas emissions, Party B should provide the data of various emissions as per the needs of Party A’s construction sites. The records and certificates of the emission data include but are not limited to: the consumption, weight, specifications and model of fuels, refrigerant, acetylene, ground powder, engineering and construction materials, machinery and facilities, purchased electricity, etc. If Party B fails to provide the necessary records and certificates within the time required by Party A, Party A may suspend the valuation until Party B makes improvements.”, in line with the environmental policies to select collaborative suppliers.
Ethics Agreement Signing
STo help suppliers align with our ESG standards, Kedge has established a comprehensive management framework spanning environmental protection, human rights, business ethics, and corporate governance. We mandate that all suppliers adhere strictly to our sustainability targets throughout project execution as a foundation for long-term collaboration. — Human rights due diligence is fully integrated into our procurement process. Through the self- assessment questionnaire, we proactively identify and mitigate risks regarding wages, working hours, prohibition of forced labor, and equal employment opportunity. For any self-assessment criteria that fall short of requirements, suppliers must submit formal corrective action plans. This ensures that our business partners actively uphold human rights and ethical operations, fostering a resilient and sustainable supply chain.
Kedge Construction incorporates environmental protection, occupational safety and health, labor and human rights, information security, and privacy requirements into its Supplier Code of Conduct and management practices. Suppliers must comply with applicable regulations, conduct greenhouse gas inventories, hold regular safety meetings, and follow the Company’s personal data protection procedures. They are also required to sign ethical conduct and site safety undertakings.Contracts may be terminated for significant environmental or social violations, while failure to provide greenhouse gas inventory records may result in suspended payments.
Evaluation System
1. Governance Framework & Evaluation Updates
Kedge requires suppliers to re-submit the “Supplier CSR Self-Assessment Questionnaire” every three years. To ensure continuous alignment with evolving industry standards and Kindom Group policies, we have upgraded our evaluation mechanisms: —
2. Supplier Management Performance & Impact
Through continuous outreach and heightened compliance expectations, supplier engagement and ESG awareness have improved significantly. Since 2022, 792 out of 904 eligible suppliers have completed the self-assessment, achieving an overall completion rate of 87.61%, with the 2024 annual rate reaching 70.57%―reflecting steady, year-over-year quantitative progress. Coupled with our proactive digital verification practices, Kedge has successfully elevated supplier management from a routine administrative process into a robust, real-time risk mitigation network.
Supplier Evaluation System
Selecting top-tier new suppliers while conducting rigorous evaluations of existing partners is a cornerstone of Kedge Construction’s commitment to engineering excellence. To this end, we have established a comprehensive evaluation system that achieves a seamless, 100% integration of traditional operational KPIs with ESG sustainability criteria.
Governance (G): We prioritize construction quality (Q), schedule adherence (D), and financial stability, supported by cost/material management (C), site coordination, and ethical compliance―ensuring suppliers execute precision work with uncompromising integrity. Social (S): Driven by our respect for human rights and human life, we heavily weight Occupational Health and Safety (OHS) performance within our evaluation. We strictly audit human rights practices (including gender equality and child labor prohibitions), labor management, and workforce health care to guarantee a safe, equitable environment for frontline workers. Environmental (E): Our assessment encompasses site-level environmental management, energy conservation and carbon reduction initiatives, and supplier proactiveness in delivering low-carbon or circular materials.
New Supplier Evaluation Analysis
Under this supplier evaluation framework, vendors are classified into three distinct management categories based on their performance scores: Category 1 (70 points and above) designates “Approved Suppliers,” further stratified into “Excellent” (average score ≥ 85) and “Good” (average score ≥ 80) based on project completion performance over the preceding two years. Partners in these tiers, recognized for consistent operational excellence and strong sustainability commitment, are invited to our Annual Supplier Conference, awarded an “Outstanding Supplier Certificate,” and granted tier-specific incentives to foster long-term strategic alignment. These incentive privileges remain valid for two years post-approval, motivating partners to continuously strive for operational excellence and sustainable growth. —
Conversely, strict bidding restrictions are enforced against underperforming vendors. Category 2 (“Below Standard,” 60–69 points) results in a one-year suspension of bidding privileges. Upon completion of the suspension period, vendors must re-apply and pass the standard onboarding evaluation required for new suppliers before bidding rights can be reinstated. Category 3 (“Unsatisfactory,” below 60 points) represents high-risk vendors who face a three-year ban on bidding rights. In cases involving severe infractions or major operational failures, Kedge enforces a permanent blacklisting and revocation of bidding privileges. Through this rigorous governance mechanism, we ensure that our supply chain partners consistently adhere to the highest standards of quality, safety, and ESG compliance.
Supplier Management and Sustainable Development Plan
Kedge Construction proactively enhances supplier management mechanisms aligned with construction industry supply chain characteristics, collaborating with partners to establish a stable and resilient sustainable supply chain. Addressing industry challenges including labor shortages and material delays, the company systematically develops work crew and material management databases, monitoring trade dynamics and material delivery status. Through diversified communication channels, professional education and training programs, and recognition systems, we strengthen construction efficiency, maintain consistent project progress, while implementing ESG principles in construction operations.
Supply Chain Stability Strategy
Communication and Capability Development
ESG Education and Training
Annual Supplier Conference
On March 21, 2025, we hosted our annual supplier conference themed “Advancing Sustainability, Innovating the Future,” bringing together over 200 partner companies, including industry leaders such as TCC Group, Tungho Steel, and Champion Ceramics.
