creating value through economic activities · creating value through economic activities management...

CREATING SUSTAINABLE VALUE

80 TOP GLOVE CORPORATION BHD

CREATING VALUE THROUGH ECONOMIC ACTIVITIES

Management approach: As a global industry leader, we are committed to delivering a strong performance consistently, in order to continue creating value for our stakeholders especially our employees, investors, shareholders as well as the country’s economy.

Our analysis on Top Glove’s FY2020 financial performance and direction moving forward is clearly stated under the Management Discussion & Analysis from page 40 to 49 in this Integrated Annual Report.

To ensure sustainable economic performance, we adopt the highest standards of corporate governance and business ethics in our business dealings, including procurement practices in our value chain, while delivering top quality products and services to our customers. Details of our corporate governance practices can be found at the Corporate Governance Overview Statement from page 111 to 132 in this Integrated Annual Report.

Upholding the principles of Honesty, Integrity and Transparency, Top Glove held the Ikrar Bebas Rasuah or Corruption Free Pledge with its board of directors following the conclusion of its first Fully Virtual EGM 18 August 2020. The pledge reflects Top Glove’s ongoing commitment to continue to combat corruption on all fronts.

81INTEGRATED ANNUAL REPORT 2020

Creating Value Through Economic Activities

ANTI-CORRUPTION AND ANTI-BRIBERY

Our approaches to embedding anti-corruption and anti-bribery practices within the Group:

ISO37001 ABMSCertification

Corruption-Free Pledge (Ikrar Bebas Rasuah, IBR) by management and staff

Whistleblowing Policy Corruption risk management in supply chain

Awareness events and programmes

Anti-Bribery & Anti-Corruption Policy

No Gift Policy

Top Glove’s zero tolerance for corruption is articulated in our Code of Conduct, Anti-Bribery and Anti-Corruption (ABAC) Policy, No Gift Policy and other governing documents which are applicable across all business units, including our suppliers and customers.

Zero tolerance towards corruption and bribery

Employees are expected to uphold the highest standards of integrity when doing business with external parties. To achieve this, anti-corruption talks, trainings and tests are conducted for employees frequently to raise awareness. All new employees will be briefed on our anti-corruption practices upon joining the Company.

The Company does not make any monetary contributions towards political campaigns, political organisations, lobbyists, lobbying organisations or other groups whose role is to influence political campaigns or public policy and legislation.

Our anti-corruption and anti-bribery practices are not only limited to employees, but also extended to our supply chain to further reduce corruption risk. We embarked on our anti-corruption journey for our supply chain way back in 2002, with the introduction of the Letter of Enforcement of Corporate Culture (LECC) for all suppliers, in which suppliers affirm their adherence to our practice of no-corruption. Corruption and bribery is part of the pre-qualification self-assessment criteria during the supplier selection process. Suppliers are required to acknowledge their adherence of the LECC half-yearly. In FY2020, all group departments under Top Glove Corporation Bhd also performed a corruption risk assessment.

Management approach: Corruption and bribery are economic crimes that have adverse impacts on the Company’s intangible assets such as reputation, staff morale and business relationships. Anti-corruption is overseen by the Group’s Managing Director, who is also the Chairman of the Top Glove Prevention and Anti-Corruption Committee (TGPAC) and spearheads the Corporate Integrity Unit at Top Glove. Over the years, we have been guided by the Group’s Anti-Corruption Policy and continuously enhance our anti-corruption practices and support the government’s initiatives in combating corruption and bribery in business activities, such as compliance with the Corporate Liability Act as well as taking the initiative to be certified with ISO 37001: 2016 Anti Bribery Management System (ABMS).

Details can be found under the Respect for Human Rights section on page 102.




ANTI-CORRUPTION AND ANTI-BRIBERY

Top Glove’s anti-corruption and anti-bribery journey

• Introduction of Letter of Enforcement of Corporate Culture (LECC) to all suppliers, in which suppliers affirm their adherence to our no-corruption practice

2002

• Establishment of the Top Glove Prevention and Anti-Corruption Committee (TGPAC), led by the Group’s Managing Director

2009

• First company to sign the Corporate Integrity Pledge and Anti-Corruption Principles for Corporations by the Malaysian government

• Launching of No Gift Policy Guidelines

2011

• Our Factory 9 in Meru, Klang was the first manufacturing facility in Malaysia to be certified with ISO 37001: 2016 Anti Bribery Management System (ABMS)

2017

• Management performed The Corruption-Free Pledge (better known as Ikrar Bebas Rasuah or IBR), an initiative introduced by the Malaysian Anti-Corruption Commission (MACC)

• Enhanced No Gift Policy with more procedures

2018

2019• IBR is taken by all employees• Introduction of Letter of

Enforcement of Corporate Culture & Business Ethics (LECCBC) to all customers

• Digitalise gift declaration under No Gift Policy

2020• Launch of the Anti-Bribery and

Anti-Corruption Handbook• Compliance with the Corporate

Liability Provision S17A

COMPLYING WITH THE MALAYSIAN ANTI-CORRUPTION COMMISSION (MACC) CORPORATE LIABILITY PROVISION SECTION 17A

In FY2020, we continued to pursue our journey in anti-corruption and anti-bribery which MACC Adequate Procedures and ISO 37001:2016 ABMS has covered Top Glove Corporation Bhd in which we oblige to comply with Corporate Liability Provision S17A that was enforced in 1st June 2020.

With endorsement from the Board of Directors and Top Management, the Anti-Bribery and Anti-Corruption Management System was implemented to corporate and operational groups in Top Glove Corporation Bhd.

Our awareness initiatives to cater MACC Amendment Act 2018, Corporate Liability Provision S17A:1. W.H.I.T.E. (5 Wells, Honesty, Integrity, Transparency, Educate) Integrity

Roadshow which covered Top Glove Corporation Bhd’s Malaysia and Thailand factories

2. Launching of Anti-Bribery and Anti-Corruption eBook (ABAC)3. Awareness Talk on Section 17A of MACC Act 2009, Corporate Liability

on Corruption for Board of Directors and senior management4. Corruption Free Pledge (IBR) by Board of Directors and Senior

Management5. Malaysian Institute of Corporate Governance (MICG), MICG Debrief Session

No corruption-related cases in FY2020:

For detailed information about the Group’s anti-corruption and anti-bribery practices, please visit to our corporate website: https://www.topglove.com/corporate-integrity/

No fines imposed in relation to corruption, bribery, anti-competitive business practices

Zero political contributions made

Zero facilitation payments made

Top Glove was ranked 11th out of 100 Malaysian public listed companies for Transparency in Corporate Reporting, an assessment by an independent party appointed by MICG.

No. of corruption cases

Financial year FY2018 FY2019 FY2020

No. of cases 0 1 0

https://www.topglove.com/corporate-integrity/



COMPLIANCE TO HIGHEST CORPORATE GOVERNANCE STANDARDS

Management approach: Top Glove fully complies with all corporate governance practices of all countries we operate in and strives to prevent all forms of illegal or wrongful acts in order to sustain our business in lawful and ethical manner. To ensure the Company is managed in the interests of stakeholders, we observe the highest standards of corporate governance and are committed to be in compliance with all related rules and regulations throughout our business activities. The Group’s corporate governance practice can be found from page 111 to 132 of Corporate Governance Overview Statement in this Integrated Annual Report, which include our commitment on board leadership & effectiveness, ethical standards, Codes & Policy, audit & risk management etc.

The Company-wide risk management is overseen by the Board Risk Management Committee.

Besides, it is crucial that network access, IT systems and data is assured at all times. To manage information security risks in order to ensure business continuity, we enhance our IT system and raise awareness among employees to prevent IT system failures and major information security incidents.

Ethics & conductHighest standards of ethics and conduct is the foundation of business dealings in Top Glove. All employees and the Board of Directors adhere to the Employee’s Code of Conduct and Director’s Code of Conduct respectively. The Codes of Conduct cover all social and governance requirements such as anti-corruption, anti-discrimination, confidentiality of information etc. that every Director and employee must observe when acting for, or on behalf of Top Glove.

In August 2019, the Company has launched its new corporate values R.I.V.E.R. (Respect, Integrity, Value, Empowerment and Relationship) and instilled the values among employees via awareness training.

In FY2020, there were 8 cases of breaches against Code of Conduct. The misconduct involved cheating such as alteration of medical certification, forging of superior’s signature on overtime form etc. These employees were required to explain their actions for the Company’s further investigation.

Data Privacy & Information SecurityInvesting in data science and analytics allows Top Glove to harness the potential of technology to deliver greater work efficiency, better quality products and services.

The information security is governed by the General Manager of the IT team, who oversees the cybersecurity

strategy as well as leads the Company to be more advanced in its digitalisation journey.

Information security plays a vital role as this does not only help us to enhance our business efficiency, but also protects our internal and customers’ data. Policies and procedures are implemented for all employees to raise awareness on information security:

a. All employees are guided by the Group’s CyberSecurity Policy. The Policy states the Code ofConduct in IT resources usage and clear escalationprocess on step-by-step guidelines for suspiciousinformation security matters

b. Frequent awareness training to staff throughemail, regular tests and talks by IT experts to buildemployees’ capabilities to recognise and deal withpotential cybersecurity issues they may encounterin their work.

We have processes in place to prevent IT system interruptions and cyberattacks to ensure data protection from malware and malicious threats, business continuity and test the system on a yearly basis.

Zero incidences over the past 4 financial years in the following area:

• Information security breaches or other cybersecurity incidents

• Information security breaches involving customers’personally identifiable information

• Customers affected by Company’s data breach• Fine/ penalty paid in relation to information security

breaches or other cybersecurity incident

Total of

108 sessions of R.I.V.E.R. awareness trainings were conductedfrom August 2019 to December 2019 at all Top Glove factories, including overseas factories

Budgeted more than RM10 million in cyber security enhancement over the next 5 years

Invested more than RM2 million in cyber security enhancement in FY2020



SUSTAINABLE SUPPLY CHAIN

Management approach: We recognise the increasing risks in supply chain management and the negative consequences if it is poorly managed. The Top Glove Business Partners’ Code of Conduct, which is available in our corporate website, sets forth the behaviour expected of Top Glove and its Business Partners to adopt the Principles of Business Social Compliance set out by Foreign Trade Association, which include ESG areas such as human rights, labour practices, occupational health & safety, environmental and business ethics.

Besides annual audits, in FY2020, we held 5 town hall sessions with packaging material, manpower agents, chemical, latex suppliers and canteen operators from 240 companies. Suppliers were briefed on the Company’s labour practices, safety and environmental compliance and expectations. Following the town hall, 10 supplier audits were conducted on suppliers as monitoring measures.

Suppliers who did not meet our requirements were given a timeline to rectify and we conducted follow-up audits to verify the corrective actions.

TOWN HALL SESSIONS WITH SUPPLIERS

Critical supplier data as at FY2020

279 critical suppliers accounting for

8% of our total suppliers

67% of procurement spending for critical suppliers in FY2020

100% critical suppliers required to

be assessed in FY2020

Stringent procurement practicesThe selection of new suppliers will undergo several stages before officially becoming Top Glove’s approved supplier. There are over ten criteria which will be used to appraise the supplier. Primarily, the material or service provided by suppliers must meet the minimum requirement set by Top Glove.

We identified our direct suppliers and classified them into 4 level of criticalness. To effectively access and manage the sustainability risks in the supply chain, we conduct supplier audits and supplier visits on all ESG aspects. Suppliers whose performance are below Top Glove’s expectation will be requested to take remediation action to rectify to ensure continuous business relationship with the Company. Besides, we adopt various approaches to reduce corruption risks in our supply chain.

NUMBER OF SUPPLIER AUDITS INITIATED IN FY2020:

2019 205

2020 279

2017 157

2018 152

To further enhance our supply chain sustainability, we have embarked on FSC (Forest Stewardship Council) certification initiatives with our factories. This is in demonstration of our focus on ethical practices in our supply chain in accordance to globally recognised Environmental, Social & Governance (ESG) standards. Our latex concentration factory in Thailand, F16L was FSC certified since 2019. Another 2 factories, F17L and F13 located in Thailand and Malaysia respectively are in the progress of being FSC certified.

Percentage of suppliers based on geographical location as at FY2020 (%)

76%

18%

4% 2%

Malaysia

Thailand

Other

Vietnam

50% procurement budget spent on Malaysian suppliers

in FY2020

Our practices in mitigating corruption risks in our supply chain are articulated in our website: https://www.topglove.com/economic/


https://www.topglove.com/economic/


MAKING A DIFFERENCE IN THE COMMUNITY (COMMUNITY INVESTMENT)

Management approach: At Top Glove, community engagement and investment initiatives are driven by the Company’s charity arm, Top Glove Foundation (TGF). Launched in 2009 by the Company’s Executive Chairman, Tan Sri Dr Lim Wee Chai and his wife Puan Sri Tong Siew Bee, TGF focuses on 3 pillars to create value in the community by uplifting their well-being and living standards.

Community development

Education support

Environmentalconservation

DOING WELL BY DOING GOOD: TOP GLOVE’S ROLE IN FIGHTING THE COVID-19 PANDEMIC

As the world largest manufacturer of gloves, Top Glove reacted immediately to the COVID-19 pandemic by donating life-saving medical gloves to front liners. Since the pandemic, the Company’s initiatives include:

a. Glove Donation to China3 million pieces of medical gloves were donatedto China as part of a joint initiative between theMalaysian government and Malaysian glovemakers

b. Glove Donation to Malaysian AuthoritiesMore than 4 million pieces of medical gloveswere donated to Malaysian hospitals, variousgovernment ministries, the Royal Malaysia Police &Malaysian charity organisations

10,516 volunteer hours were

contributed by staff for glove packing

c. Medical Equipment ContributionContributed RM300,000 worth of ventilators &medical suits to the Ministry of Health Malaysia forfrontline medical professionals

d. Dedicated CSR FundRM5 million earmarked for CSR initiatives to assistthose impacted by the pandemic

Community developmentWe deliver aid to communities through various means such as philanthropic giving, awareness campaigns and internship opportunities. In FY2020, TGF has contributed more than RM480,000 donation to over 60 needy families, schools and charity organisations.

Top Glove does not only contribute through philanthropic giving but also by being hands-on in improving the community’s living standards. For instance, 41 of our employees spent 19 hours in total to repaint 3 therapeutic rooms for special needs children at PDK Meru.

As at FY2020, TGF has invested a total of RM30 million to support various causes under the TGF pillars.

Employees are always encouraged to give back to the community by volunteering in TGF’s activities, which range from community engagement activities to environmental conservation activities. However, due to the COVID-19 pandemic in FY2020, TGF has reduced physical activities to reduce risk and focused on a crucial mission: glove donation. A total of 16,488 volunteer hours were contributed by the employees in

FY2020, of which 10,516 hours were volunteer hours for glove packing to drive glove donation campaign during the pandemic.

A total of 16,488 volunteer hours were contributed by employees in

FY2020




MAKING A DIFFERENCE IN THE COMMUNITY (COMMUNITY INVESTMENT)

Education SupportWe believe quality education is the key driver for transformation. Through TGF, we support quality education opportunities through scholarships, advancement of education and other education related funding.

Other education related support:• UTAR Engineering Society Leadership and

Teambuilding Camp 2020o UTAR Engineering Society collaborated with Top

Glove for the second time for this event with the aim to allow students to take on leadership roles and enhance their teambuilding skills which are important when they start working.

• S.A.V.E. 2019 with Universiti Technology Petronas (UTP) o Top Glove teamed up with UTP students in

organizing S.A.V.E. (Support Affirm Value Educate) to provide education and engage with children from the Praised Home Girls and Boys located in Ipoh, Perak with educational modules focused on Science, Technology, Engineering and Mathematics (STEM).

• Mouth Cancer Awareness Week with Malaysian Dental Student Associationo TGF supported the Malaysian Dental Student

Association’s event Mouth Cancer Awareness Week with the aim to create public awareness regarding mouth cancer.

As a young talent oriented corporation, we are committed to provide a platform for university and college students to enhance their skills and gain exposure to the corporate world. We identify suitable interns from various tertiary education institutions, offer them suitable roles in the company and assist them to sharpen their skills and improve their knowledge throughout their internship journey.

Environmental ConservationIt is our responsibility to conserve the environment especially in the vicinity of our core operation area. Our employees volunteered for TGF’s environmental conservation programmes to make the community a better place to live in. However, the number of environmental conservation activities conducted in FY2020 is relatively lesser due to the COVID-19 pandemic which required a reduction in physical activities.

Total of

1,654 internship placements in FY2020

27 scholarship opportunities offered with total value of

RM 824,000 in FY2020

A total of 107 scholarships offered as at FY2020. These talents will join Top Glove after their graduation to contribute their knowledge and skills to the Company and the industry

TGF SAVE THE FOREST PROJECT

TGF BEACH COMBING PROJECT

A “Gotong-Royong” project together with local community members from Trash Hero Banting to clean up Morib Beach & Kelanang Beach in Selangor, Malaysia.

4 programmes

217 volunteers from Top Glove

1,085 volunteer hours clocked

An initiative to conduct maintenance works and construction of park benches at Peak Garden, Setia Alam. This included assembling and painting of park benches, picking up rubbish and clearing the hiking trail to ensure good and safe condition for the community.

As part of its focus on environmentalism and in support of the Setia Alam Community, Top Glove Foundation together with staff volunteers’ carry out maintenance works and construction of park benches at Peak Garden, Setia Alam in the months of July and August 2020.

10 programmes

369 volunteers from Top Glove

1,591 volunteer hours clocked



CUSTOMER RELATIONSHIP

Management approach: We engage frequently with our customers, who are one of our key stakeholders, to understand their needs, identify shortfalls and create more value. Effective customer relationship tools provide important data which allows us to target relevant customer groups and develop specific products. Strong relationship with customers leads to increased customer loyalty. Our approach to customer relationship is providing customer satisfaction, which entails not only high quality products but also ethical marketing practices as well as data protection.

Customer engagementWe engage our customers through email communications, marketing offices in Malaysia, USA & Brazil, customer portal and trade shows. Adhering to the Group’s Code of Ethics & Conduct and Anti-Corruption Policy, we practice ethical marketing in business dealings with our business partners. We are committed to practice ethical interaction with customers and provide accurate and balanced information about our products. There were no legal actions or fines related to anti-competitive practices in the past 4 financial years.

Customer satisfactionCustomer satisfaction survey is conducted half yearly via an online questionnaire the scope for which includes price competitiveness, product quality, delivery, responsiveness, new product development and corporate website. For each scope, we analyse the data gathered, identify areas of improvement and market demand trends from the survey results to further improve our marketing strategies and practices.

We engage with our customers via various channels, including trade shows.

Financial year FY2017 FY2018 FY2019 FY2020Customer satisfaction (%) 94 93 80 89

Percentage of total customers responded (%) 11 12 20 19

Note: Customer satisfaction in FY2019 was lower as we revised our survey questionnaire and weightage of the various areas surveyed in order to better reflect customer expectation.

Customer data is protected under the Personal Data Protection Act 2010 (PDPA). There was no complaint with regards to breaches of customer privacy and losses of customer data for the past 4 financial years.


Customer satisfaction results:



CREATING INDIRECT ECONOMIC IMPACT IN LINE WITH OUR HEALTHCARE AND COMMUNITY APPROACH

Management approach: Besides investment in our operations, we create value through with several initiatives to improve socio economic wellbeing. This includes:

1 2 3 4

Health infrastructure investment in our key operation area, Klang with 24-hour clinic and gymnasium

Facilities improvement: Flood mitigation project

Healthy vegetarian meal subsidy

Job opportunities to the local community

Health infrastructure investmenta. TGGD (Top Glove Global Doctors) Medical and

Dental Clinic

Established in 2017, TGGD Medical and Dental Clinic is a joint venture formed between Top Glove and Global Doctors continue to serve all Top Glove employees in Klang as well as the Setia Alam community. TGGD is a 24-hour Multidisciplinary, Multi-Specialty ‘Ambulatory Care Centre’ which comprises Family and Specialist Practice, Emergency Medical Services with a fully equipped 24-hour ambulance, Full Tiered Dental Facilities, Diagnostics such as Ultrasound, X-ray, Stress Test, In-house laboratory and Physiotherapy services.

In view of the increasing importance of mental health in recent years, in 2020, TGGD extended its services to include psychological healthcare by having a mental health counsellor stationed at TGGD to serve employees and community.

TGGD has expended its services with an additional 3 on-site clinics at Top Glove Factory 2, Top Glove Factory 18 and Peninsula International School. Medical Programs implemented such as Staff Health Management Program (SHMP), Workers Health Protection Program (WHPP) and Safety Health & Emergency Preparedness Program (SHEPP) and Zero Harm and Safety Health Emergency Preparedness Program. TGGD’s staff capacity can be found under Occupational Health and Safety Section in this Report.

b. Gymnasium facilities

Top Glove invested in comprehensive gymnasium facilities in 2016 with total investment cost of more than RM340,000. This gym facility not only provides the basic gym equipment but also various classes such as Zumba, yoga, cardio boxing, Bollywood dance, Kpop dance and belly dance. It is currently serving more than 2,200 Top Glove employees and the Setia Alam community.

TGGD Medical and Dental Clinic is one of our initiatives in demonstration of our commitment to provide better healthcare services to our employees and community.

Please refer to Managing Flood Risk section, page 90 in this Report for details

Please refer to Healthy Vegetarian Meals to Reduce Carbon Footprint section, page 95 in this Report for details

Please refer to New Recruitment section, page 108 in this Report for details


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