Spend analysis is one of the key tools that Thaioil Group use to proactively identify savings opportunities, manage risks and optimize the organization’s buying power. It is often regarded as the fundamental foundation of sourcing. Data from spend analysis can improve visibility into corporate spend, as well as drive performance improvement, contract compliance, and most importantly, cost savings.

Thaioil Group has analyzed by grouping all suppliers based on Country, Sector and Commodity and use spend as part of supplier screening for significant (strategic/critical) suppliers.

• Promoting Sustainable Procurement

Thaioil Group manages the procurement and service by selecting material, equipment, and service, together with developing green products to reduce upstream waste and to increase efficiency of resource consumption. Since 2020, Thaioil Group has been certified by sustainable procurement or ISO 20400:2017 which was applied in all non-crude procurements. Thaioil Group also promotes sustainable procurement across the supply chain through improving the Company’s Procurement Policy and communicating with suppliers to build their readiness in the annual Thaioil Group Supplier Seminar.

For the procurement of materials, equipment, and office supplies; the purchase of environmentally friendly products (Green Products) is considered. This aims to motivate suppliers to develop their production processes for environmentally friendly products and reduce negative environmental impacts throughout the supply chain. In 2022, Thaioil Group’s procurement of environmentally friendly products were 98%, which exceeds the target of 95% of total spending in this product category. Additionally, the total spending of green procurement in the new product category for the year 2022 has increased by 65% compared to 2021. In relation to this, Thaioil Group was able to avoid indirect greenhouse gas (Scope 3) of 1,472 tons of carbon dioxide equivalents.

Thaioil Group is determined on “Empowering Human Life through Sustainable Energy and Chemical” in line with the principle and guidance on social responsibility by creating collaboration, trustworthiness, and value for stakeholders through,operational excellence, transparency, and continuous innovation. To achieve the sustainable growth, Thaioil Group strongly believes that Environmental, Social, and Governance (ESG) whilst contributing to the realization of Sustainable Development Goals shall be conducted across the supply chain.

Conducting business with Thaioil Group Suppliers and Business Partners in a way that does not create adverse ESG
impacts is vital to ensuring a strong core business, enriching stakeholders’ well-being, and delivering sustainable
returns. To the end, Thaioil Group has a supplier management process that includes sustainability risk management
in the supply chain. We have also implemented additional supplier management measures during the COVID-19
pandemic, including communicating measures to prevent transmission to suppliers, implementing outbreak controls
for Thaioil Group Suppliers, providing work from home options to suppliers and contractors, assessing risk and
tracking of long lead items, and managing suppliers during turnaround and maintenance period.

Thaioil Group give the maximal priority and focus on sustainability management. Hence, the strategic oversight
of ESG implementation is instructed through Thaioil Group Sustainability Management Policy which is endorsed by
Chairman of the Board of Directors and CEO. This policy is deployed to BOD, the managements and all staff,
and communicated to all stakeholders to ensure that ESG strategies and programs are successfully implemented
and drive the whole business to reach the sustainability goals.

ESG strategic oversight of implementation from BOD is cascaded to Sustainable Procurement Policy which is endorsed
by CEO and then cascaded to Strategic Direction and roadmap that consists of supply chain ESG strategy and
supplier ESG Program.

The commitment of our top managements drives our successful sustainable procurement, and it is important that top management understands how procurement can support the business goals and improve performance. Therefore, sustainability goals are fully integrated into Thaioil Group Procurement Policy and Strategic Direction in order to clearly set intentions, directions and priorities for the whole organization in terms of sustainable procurement. According to our sustainable procurement policy and strategic direction, it is realized that we strongly commit to conduct our supply chain management towards sustainability through ESG dimensions and Sustainable Code of Conduct for Suppliers of Thaioil Group (SCOC).

Since 2015, all newly registered suppliers must acknowledge to comply with SCOC and we have continued monitoring
and driving suppliers to improve their performance in this area.

In 2020, we have successfully implemented ISO 20400: Sustainable Procurement to ensure that sustainability (ESG)
management is fully embedded into our procurement processes with systematic approach and align with Thaioil
Group Sustainability Management.

We are the first refinery in Thailand to implement ISO20400 to cover all products and service categories for non-crude
procurement processes. Our Executive Vice President-Organization Effectiveness and Vice President-Procurement and
Contract were the representative of Thaioil Group  to receive a formal accreditation of ISO20400: Sustainable Procurement from MASCI.

Thaioil Group expects all suppliers to acknowledge our Sustainable Code of Conduct for Suppliers of Thaioil Group
(SCOC). To ensure the supplier’s understanding on the SCOC, the Company has communicated through website
and annual seminars with Thaioil Group suppliers.

Thaioil Group has fully integrated sustainability into the existing procurement process (e.g., policy, strategic direction, work processes, risk management (including opportunities) for sustainable environmental, social and economic development. To ensure that we successfully implement with systematic management system approach according to international standard practice, from 2020 onwards, we have applied ISO 20400 (Sustainable Procurement) to the whole procurement processes (non-crude) and plan to reassessed by third-party who is a certified body authorized to award a formal accreditation to this standard in every three years.

Sustainable procurement represents an opportunity to providemore values to Thaioil Group by improving productivity,
assessing value and performance, enabling communication between buyers,suppliers and all stakeholders, and by
encouraging innovation. Therefore, in every year, we perform risk assessment based onproduct/service categories
and supply base to ensure that the current current implementation is still efficiency and effectiveness and risk
management through Strategic Sourcing, SRM program and Supplier ESG program are regular monitoring.

Management System Approach

Thaioil Group has established a supply chain management approach that is comprehensive of and in alignment
with ISO 20400: 2017 Sustainable Procurement standards for petroleum and petrochemical businesses (not including
crude procurement). This covers 9 product groups and 11 service groups. Thaioil has applied this standard to
procurement processes for all key product and service groups (non-crude procurement) to increase confidence in
the Company’s sustainable procurement processes in line with international standards. The Sustainable Procurement
Guidance has been helpful to the Company in integrating sustainable operating objectives, strategies, and procurement
processes. It is also a tool that can be used to increase productivity, reduce costs, and increase innovation. We
recognize that the products and services we purchase can affect our organization – specifically in our capabilities,
the welfare of our employees,our reputation, and stakeholder relationships – as well as other impacts on the economy,
environment, and society.

In 2020, Thaioil started using a supplier management system that covers the entire supply chain through an ESG risk assessment. The risk assessment is carried in the process of vendor registration, vendor qualification, and supplier risk management that is comprehensive of regulatory, legal, environmental, social, and other information on operations from external information sources. The Company will then review findings gained from this system and regularly monitor
associated risks, such as non-compliance with legal regulations, use of child labor, or adverse environmental impacts.

Organizing the procurement function towards sustainability

• Organizational culture

Effective delivery of the sustainable procurement policy and trategy requires that individuals involved in procurement,
including internal stakeholders and business partners (e.g. SSHE, contract holders, PTT Group or others engaged with
suppliers in any capacity), understand the reasons for implementing sustainable procurement. Therefore, Thaioil Group
has closely communicate and collaborate with all internal stakeholders to understand how to play their part in such
implementation, and are given the means to do so. Those individuals tasked with delivering sustainable procurement
should be enabled to do so through a supportive organizational culture, performance management, education,
training and support.

      Developing Sustainable Procurement      ISO20400 Workshop for procurement       ESG Auditor Workshop for
      Practices in allignment with ISO20400     & contract and internal stakeholders         PTT Group Procurement

• Procedures and systems

We have a set of procedures and tools, i.e. policies, strategies, roadmap, procedures and templates, etc. that are
aligned with the Thaioil Group ’s sustainability and procurement objectives. In addition, Thaioil Group use systems
(e.g., SAP Ariba system, TOPTEN, Contractor Management System, SRM Platform etc.) to support our workflow
and procedures.

    Supplier Database Management       Sustainable Procurement                         SRM Platform
          Work Instruction                      Work Intruction        

• Engaging the supply chains

In order to fully manage sustainability risks (including opportunities) throughout its supply chains, Thaioil Group engage
the suppliers in initiatives that go beyond contractual requirements.  For example, Thaioil Group invited suppliers to join
All SAFE White Green Program, PTT CG Day, CAC Seminar, Green Industry Applications and CSR Activities
( e.g., Memorandum of Cooperation: MOC).

Supplier Capacity Building

Safe White Green Program: Since 2021, Safe White Green Program is grounded in Thaioil’ s expectations of its suppliers,
as expected in the Security, Safety, Occupational Health and Environment (SSHE) Policy. We do this through a 5-step
process consisting of

SRM Webinar 2022 :

Integrating sustainability into the procurement process

Supplier ESG program is integrated into supplier life cycle management (e.g., SCOC compliance in contract clauses, SCOC compliance in performance evaluation criteria, supplier recognition for supplier who has  better ESG performance and apply
a minimum weight to ESG criteria in supplier selection and contract awarding for the future sourcing, suspension/blacklist
for supplier who is not complied ESG and ignore to remedy etc.) alongside supplier risk management.

To ensure that all processes and the related documents are regularly reviewed, we have managed and controlled them according to ISO9001. For example, there is annually reviewed the Supplier Portfolio, Supplier Risk Assessment
(e.g., Supply Risks, ESG Risks) to ensure that the data keep up to date and protect Thaioil Group’s supply chain from uncertainty and avoid any business disruption.

• Supplier Life Cycle Management

Thaioil Group has integrated supplier ESG program into Supplier Life Cycle Management process. 

Remark: (1) This acitivty will be fully implement in 2023

To ensure that all processes and the related documents are regularly reviewed, we have managed and controlled them according to ISO9001. For example, we have annually reviewed the Supplier Portfolio, Supplier Risk Assessment (e.g., Supply Risks, ESG Risks) to ensure that the data keep up to date and protect our supply chain from uncertainty and avoid any business disruption.

Moreover, procurement and contract practices towards suppliers are regularly reviewed to ensure alignment with SCOC and to avoid potential conflicts with ESG requirements.

Finally, in every 3 year, third-party will assess the whole procurement and contract process to ensure that all processes are aligned with SCOC and ESG requirement.

• Supplier Engagement and Satisfaction

Thaioil Group has put in place measures to ensure that procurement practices are clear, fair, and professional. The
Company uses SAP Ariba Network “E-Procurement” system,which supports supplier engagement, increase efficiency
in procurement processes, and enables improvements in sustainable procurement.

As COVID-19 pandemic situations continue in 2021, Thaioil Group digitized the bidding process to ensure that
the Company can continue business with suppliers while complying with COVID-19 control measures. The Company
allowed online bid submissions through the E-Procurement system. Throughout 2021, over 200 companies submitted
bids in this way. The majority of suppliers were highly satisfied with this system, as it reduced costs and time needed
for processing and allowed them to inspect information through the system. This gave suppliers confidence of
the Company’s transparency and fairness. Furthermore, Thaioil Group started implementing the E-Catalogue system
to approve purchase orders online. This also helps reduce the number of steps needed for approval, facilitate
convenience and speed for suppliers, while also being environmentally friendly as it reduces paperwork and resource
consumption.

Thaioil Group developed a contractor management system (CMS) to support post-award processes. Through this system,
suppliers can apply to obtain the contractor card to enter Thaioil Group premises from any location and at any time.
All supplier information collected on this PDPA-compliant system is sorted systematically and facilitated data analysis
for users. Furthermore, the CMS also accommodates supplier assessment through the C-PMS (Contractor-Performance Management System). After the contract is completed, Thaioil Group will assess supplier performance based on KPIs
that were agreed on with suppliers. These KPIs can cover a range of topics such as ESG, SSHE, and quality. Together
with the supplier, Thaioil will exchange feedback to identify areas of improvement for future contracts.

Moreover, in order to ensure that Thaioil is aware of the needs of our suppliers, the Company has continued to engage,
communicate, and listen to supplier opinions on different issues. We collect such information through conducting surveys
and gathering feedback on our procurement management, service quality, and transparency and fairness. Supplier inputs
are then integrated to the Company’s decision-making and management process. In 2021, Thaioil employed an external
expert to survey supplier perspectives and opinions. The findings from the survey on suppliers’ views towards working
with Thaioil are presented below:

During COVID-19 pandemic, to ensure that suppliers comply with Sustainable Code of Conduct for Suppliers of Thaioil and Subsidiaries (SCOC), we conducts supplier assessment remotely by verifying the current accreditations held for supplier’s management systems such as ISO9001, ISO14001, ISO18001, ISO 26000, ISO 50001, ISO 20400, ISO27001, Green Industry level certificated by Ministr of Industry (Thailand), CAC certification. Moreover, when suppliers work at Thai Oil Site, we have regular SSHE site audited and performance assessment during contract execution to ensure that suppliers complied with SCOC.

After contract close-out, contract holders will evaluate the supplier performance. SSHE, ESG and SCOC compliance are
part of performance measurements. All results of supplier performance evaluation are recorded in the systems.

ESG Desk Assessment Approach

Upon reviewing the risk assessment results, Thaioil will select suppliers with high ESG risk levels and critical tier-1
suppliers to participate in the ESG Verification Program, in order to verify that the identified risks are being properly
managed.

In 2022, Thaioil revisited the ESG assessment due to the COVID-19 pandemic. Results from this assessment will be
adapted the approach for third party assessment towards the use of audit reports and certifications such as ISO14001,
ISO50001, ISO45001, OHSAS18001, ISO9001, ISO17025, ISO27001, Green Industry level certificated by Ministry of
Industry (Thailand), CAC certificated by Thai Private Sector Collective Action Against Corruption (Thailand), Corporate
Social Responsibility, Department of Industrial Work Award by Department of Industrial Works, Ministry of Industry
(Thailand) and audited by Thaioil’ s waste management and safety management team. Based on this approach, 206
suppliers – 85.71% of high risk suppliers and 90.24% of critical suppliers – passed the verification.

ESG On-Site Assessment Approach

According to risk assessment results, Thaioil Group has 2^nd party supplier on-site ESG assessment. For example;
there are SSHE (Security, Safety, Occupational Health, and Environment) assessments at both Thaioil and Supplier Sites.

Moreover, for Major Turn Around (MTA), our top management will audit at site with supplier’s management to ensure
that critical suppliers well perform and comply with SCOC.

                           Thaioil Group Site                                            Supplier Site  

Supplier Assessment

                Number of significant             Number of significant suppliers        Number of suppliers with 
              supliers assessed via desk              assessed and found               potential negative impacts 
          assessments/on-site assessments         potential negative impacts              that were suspended

       % of significant suppliers assessed     % of significant suppliers supported          Number of suppliers with 
                                                    in CA implementation                  potential negative impacts 
                                                                                            that were terminated

          Suppliers Corrective Action Progress                                 Supplier in Capacity Building Programs

            Number of significant supliers                                           Number of significant suppliers  
           supported in CA implementation                                          in capacity building programs

              % of significant suppliers                                           % of significant suppliers in suppliers
             supported in CA implementation                                        in capacity building programs