Annual Report 2020

China Merchants China Direct Investments Limited Annual Report 2020 79 ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT (CONTINUED) SOCIAL RESPONSIBILITY (CONTINUED) Supply Chain Management The Company and the Investment Manager mainly engage with professional service providers for service such as risk advisory, business consulting and legal advisory. A transparent and fair procurement procedure is in place for selecting our professional service providers. All professional service providers are selected on a competitive basis and critical factors are taken into account. Such factors include, but not limited to, reputation, price, integrity and competence. The quality of their service is closely monitored to ensure that the service provided is in accordance with agreed contractual terms. The staff is trained to enact with reference to the procurement procedures to make sure that proper internal controls are well in place. Ethical standards and our ESG policy are taken into consideration when it comes to service provider selections. The Company and the Investment Manager will avoid those service providers who are publicly known to have significant ESG non-compliances. With this practice, we believe the environmental social risks of our supply chain are properly managed and are kept to minimal. Feedbacks are provided regarding their ESG performance whenever it is possible and suitable. The service providers are closely monitored and we reserve the right to review their ESG policies and procedures and their ESG regulation compliance evidence. We also encourage our service providers: ‧ complying with our anti-fraud policies; ‧ respecting employees’ right and equal opportunity; and ‧ integrating sustainability principles into business operations. Number of the Company’s active suppliers by geographical region: Geographical location Number of active suppliers Hong Kong 11 Mainland China 4 It is required for our service providers to maintain confidentiality of our business information. The business agreement will be terminated should there be any breaches in relation to the confidential information leakage and we retain the right to pursue legal action for any loss resulting from the breach. Therefore, to lower the regulatory risks, the Company and the Investment Manager closely monitor news outlet for any ESG non-compliances of our service providers.