Neftaly Internal Audit Systems for Ethical Sourcing in Holdings

Overview
Neftaly Holding Companies are committed to maintaining the highest standards of ethical sourcing across all subsidiaries and supply chains. The Internal Audit function plays a critical role in ensuring that sourcing practices align with corporate values, regulatory requirements, and global best practices in environmental, social, and governance (ESG) standards.

Objectives of Ethical Sourcing Audit
The internal audit system for ethical sourcing is designed to:

1. Verify Supplier Compliance: Ensure that suppliers adhere to Neftaly’s ethical sourcing guidelines, including labor standards, human rights, environmental stewardship, and anti-corruption policies.
2. Assess Risk Exposure: Identify and evaluate potential risks in sourcing practices that may lead to reputational, operational, or regulatory issues.
3. Promote Transparency: Maintain clear documentation and reporting across the supply chain to support traceability and accountability.
4. Enhance Supplier Performance: Provide recommendations to suppliers for improving compliance and aligning with Neftaly’s sustainability goals.
5. Support Continuous Improvement: Foster a culture of ongoing ethical and sustainable sourcing throughout all holdings.

Audit Scope
The audit covers:

• Supplier selection and onboarding processes.
• Compliance with international labor standards, including prevention of forced labor and child labor.
• Environmental practices, including responsible sourcing of raw materials.
• Supply chain traceability and transparency mechanisms.
• Adherence to contractual obligations related to ESG and corporate social responsibility (CSR) criteria.

Methodology
Neftaly’s internal audit methodology for ethical sourcing integrates risk-based and compliance-focused approaches:

1. Risk Assessment: Identify high-risk suppliers and sourcing regions using data analytics and ESG metrics.
2. Documentation Review: Examine supplier contracts, certifications, and policies for alignment with Neftaly standards.
3. On-Site Verification: Conduct physical inspections and audits of supplier operations, where feasible.
4. Stakeholder Engagement: Consult with internal teams, suppliers, and external experts to evaluate sourcing practices.
5. Reporting & Recommendations: Generate actionable audit reports highlighting gaps, best practices, and corrective measures.
6. Follow-Up Audits: Monitor progress on corrective actions and ensure long-term compliance.

Governance and Accountability
The Internal Audit team reports directly to the Board Audit Committee to ensure independence and transparency. Ethical sourcing audit findings are integrated into enterprise-wide risk management frameworks, influencing strategic decisions and supplier relationship management.

Key Benefits

• Reduced reputational and operational risks from unethical sourcing practices.
• Enhanced supplier accountability and ESG compliance.
• Strengthened investor and stakeholder confidence through transparent reporting.
• Continuous improvement in sustainability and corporate responsibility initiatives.

Conclusion
Neftaly’s Internal Audit Systems for Ethical Sourcing serve as a cornerstone for sustainable and responsible supply chain management. By systematically auditing and improving sourcing practices across all holdings, Neftaly ensures that ethical standards are not only met but continuously elevated, reinforcing the company’s commitment to integrity, social responsibility, and long-term value creation.