Supplier Human Rights Incentive

1.PURPOSE

This document describes the process by which Scorp Group Ltd evaluates, incentivises, and manages its business relationships with suppliers and business partners based on their compliance with human rights laws and international human rights standards. This process supports Scorp Group's commitment to embedding human rights due diligence throughout its supply chain, in accordance with:

The UN Guiding Principles on Business and Human Rights (UNGPs), Pillar II: Corporate Responsibility to Respect

The OECD Guidelines for Multinational Enterprises (Chapter IV: Human Rights)

The ILO Declaration on Fundamental Principles and Rights at Work

ISO 26000: Guidance on Social Responsibility (Section 6.3: Human Rights)

The UN Global Compact Principles 1 & 2 (Human Rights)

The German Supply Chain Due Diligence Act (LkSG) and equivalent applicable national regulations

2.SCOPE

This process applies to all direct and indirect suppliers, contractors, sub-contractors, and business partners engaged by Scorp Group Ltd globally, across all procurement categories and geographies.

3.GUIDING PRINCIPLES

Scorp Group Ltd operates under the principle that business relationships should be used as a lever to promote and uphold human rights. Rather than engaging solely in punitive measures (e.g. contract termination), Scorp Group prioritises a constructive, incentive-based approach to drive continuous improvement among its suppliers, consistent with the UNGPs' expectation of "leverage" and the OECD's guidance on responsible disengagement.

4.PROCESS DESCRIPTION

STEP 1 — SUPPLIER ONBOARDING & BASELINE HUMAN RIGHTS ASSESSMENT

1.1 All new suppliers are required to complete Scorp Group's Supplier Human Rights Self-Assessment Questionnaire (SAQ) prior to contract award, in alignment with SAP Business Network / Ariba assessment standards.

1.2 The SAQ evaluates compliance with core areas including: forced labour, child labour, non-discrimination, freedom of association, fair wages, occupational health and safety, and grievance mechanisms.

1.3 Suppliers are scored on a tiered risk matrix (Low / Medium / High / Critical) based on SAQ responses, country risk indices (e.g. Global Slavery Index), sector risk, and spend value.

1.4 All onboarded suppliers must formally acknowledge and sign Scorp Group's Supplier Code of Conduct, which incorporates human rights obligations aligned with the ILO Core Conventions and UNGPs.

Reference Standard: OECD Due Diligence Guidance for Responsible Business Conduct, Step 2 (Identify and Assess Adverse Impacts).

STEP 2 — ONGOING MONITORING & PERFORMANCE EVALUATION

2.1 Scorp Group conducts periodic human rights performance reviews for all active suppliers. The frequency is determined by the supplier's risk tier:

Low Risk: Annual review via updated SAQ

Medium Risk: Bi-annual review + desk-based audit

High Risk: Annual third-party audit (e.g. SMETA 4-Pillar, PSCI, TfS)

Critical Risk: Immediate corrective action plan + on-site audit within 60 days

2.2 Performance data is tracked in Scorp Group's Supplier Management System (SMS) and benchmarked against KPIs including:

Zero tolerance violations (forced labour, child labour): Target 0

Corrective Action Plan (CAP) closure rate: Target >= 90% within agreed timelines

Worker grievance resolution rate: Target >= 95%

Human rights training completion rate: Target >= 85% of supplier workforce

Reference Standard: ISO 26000 Section 6.3.6 (Avoiding Complicity); OECD Step 4 (Track Implementation and Results).

STEP 3 — INCENTIVE FRAMEWORK FOR COMPLIANT SUPPLIERS

In accordance with the UNGPs and OECD guidance, Scorp Group has established a structured positive incentive framework to reward and encourage suppliers who demonstrate strong human rights compliance. These incentives are formally embedded into procurement decision-making processes.

3.1 PRICE PREMIUMS

Suppliers achieving a "Gold" or "Platinum" human rights compliance rating (as assessed through audits and SAQ) are eligible for a negotiated price premium of up to 3%, recognising the cost of maintaining robust human rights standards. This is reviewed annually during contract renewal.

3.2 INCREASED ORDER VOLUMES

Preferred supplier status is granted to suppliers with sustained high compliance scores. Preferred suppliers receive priority consideration for volume increases, sole-source awards, and expanded category scope, consistent with the OECD principle of using purchasing power as leverage.

3.3 LONGER CONTRACT TERMS

Compliant suppliers may be offered extended contract durations (e.g. from 1-year to 3-year or multi-year contracts), providing business stability and predictability as a direct reward for human rights performance.

3.4 EARLY PAYMENT TERMS

Suppliers demonstrating compliance may be offered improved payment terms (e.g. net 15 rather than net 30/60), supporting supplier financial resilience — particularly for SMEs — in recognition of the resource investment required to uphold human rights standards.

3.5 CAPACITY BUILDING SUPPORT

Scorp Group provides compliant and improvement-committed suppliers with access to:

Human rights training programmes (online and in-person)

Shared audit cost arrangements for third-party assessments

Access to Scorp Group's network of human rights consultants and legal advisors

Participation in Scorp Group's Annual Sustainable Supply Chain Forum

3.6 SUPPLIER RECOGNITION PROGRAMME

Top-performing suppliers are publicly recognised through Scorp Group's annual Responsible Sourcing Award, featured in the sustainability report, and referenced in customer communications as preferred ethical suppliers.

Reference Standard: UNGP Commentary to Principle 19 (leverage); OECD DDG Step 3 (Cease, Prevent or Mitigate); UN Global Compact Principle 2.

STEP 4 — ENGAGEMENT AND CORRECTIVE ACTION FOR NON-COMPLIANT SUPPLIERS

4.1 Where human rights issues are identified, Scorp Group will first seek to engage constructively with the supplier through a structured Corrective Action Plan (CAP), rather than immediate termination, in line with OECD guidance on responsible disengagement.

4.2 CAP timelines are set based on severity:

Minor non-conformance: 90-day CAP

Major non-conformance: 60-day CAP with monthly check-ins

Critical violation: Immediate suspension; 30-day CAP or contract termination

4.3 Suppliers that fail to close CAPs within agreed timelines or refuse to engage are escalated to the Procurement and Sustainability Review Committee (PSRC) for a decision on contract suspension or termination.

4.4 In cases of contract termination due to human rights violations, Scorp Group follows a responsible exit process to minimise adverse impacts on workers, as recommended by the UNGPs and OECD DDG.

Reference Standard: OECD DDG Step 5 (Remediate or Collaborate for Remediation); UNGP Principle 22 (Remediation).

STEP 5 — DECISION TO ENGAGE OR TERMINATE BUSINESS RELATIONSHIPS

5.1 All decisions to engage new suppliers or terminate existing suppliers are reviewed by the PSRC, which includes representatives from Procurement, Legal, Sustainability, and HR.

5.2 Human rights risk and performance data from Steps 1-4 forms a mandatory input into supplier selection and contract renewal decisions via the Supplier Scorecard.

5.3 The Supplier Scorecard assigns a Human Rights Performance Score (HRPS) with a minimum threshold:

Score >= 80%: Eligible for engagement / contract renewal + incentives

Score 60-79%: Engagement with mandatory CAP

Score < 60%: Engagement suspended; escalation to PSRC

5.4 Decisions are documented, retained for a minimum of 5 years, and made available for regulatory reporting and external audit.

Reference Standard: OECD DDG Step 6 (Communicate); UNGP Principle 20 (Tracking); LkSG Section 5 (Risk Analysis Documentation).

5.ROLES AND RESPONSIBILITIES

Chief Sustainability Officer (CSO): Overall ownership; annual process review; Board reporting

Procurement Team: SAQ administration; scorecard management; incentive awards

Legal & Compliance: Contractual obligations; CAP enforcement; termination process

HR Department: Internal training; worker grievance liaison

Sustainability Team: Audit coordination; KPI tracking; supplier capacity building

PSRC (Committee): Escalation decisions; engagement/termination approvals

6.RECORD KEEPING AND REPORTING

All supplier assessment results, audit reports, CAPs, incentive decisions, and engagement/termination records are maintained in Scorp Group's Supplier Management System (SMS) for a minimum of 5 years.

A summary of incentive awards, corrective actions, and supply chain human rights performance is included in Scorp Group's Annual Human Rights and Sustainability Report, published publicly on the company website.

Data is reported in compliance with GRI Standard 414 (Supplier Social Assessment) and UNGP Reporting Framework requirements.

7.RELATED DOCUMENTS

Scorp Group Human Rights Policy (SG-HR-POL-001)

Supplier Code of Conduct

Supplier Self-Assessment Questionnaire (SAQ)

Corrective Action Plan (CAP) Template

Procurement Policy

Grievance Mechanism Procedure (SG-HR-PROC-003)

Annual Human Rights & Sustainability Report

8.INTERNATIONAL STANDARDS REFERENCED

UN Guiding Principles on Business and Human Rights (2011) — Pillars I, II, III

OECD Guidelines for Multinational Enterprises (2023 Update) — Chapter IV

OECD Due Diligence Guidance for Responsible Business Conduct (2018)

ILO Declaration on Fundamental Principles and Rights at Work (1998, amended 2022)

ILO Core Conventions (C029, C087, C098, C100, C105, C111, C138, C182)

ISO 26000:2010 — Guidance on Social Responsibility

UN Global Compact Principles 1 & 2

GRI Standard 414: Supplier Social Assessment (2016)

UNGP Reporting Framework (Shift & Mazars, 2015)

German Supply Chain Due Diligence Act — LkSG (2023)

SMETA (Sedex Members Ethical Trade Audit) — 4-Pillar Audit Standard

Next Review: June 2026