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FY07 Global Citizenship Report

» Introduction
» Global citizenship at HP
» Ethics and compliance
» Supply chain responsibility
» Performance
» Audit results
» About HP’s supply chain
» Approach
» Standards
» Assessing conformance
» Collaboration
» Third-party audits
» Case studies
» Goals
» Perspective
» Supplier diversity
» Climate and energy
» Product reuse and recycling
» Product innovation
» Operations
» Privacy
» Employees
» Social investment
» About this report
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Auditing is central to our supply chain social and environmental responsibility (SER) program. Since 2004, we have conducted 410 audits, including 252 initial and 158 follow-up inspections, at sites employing more than 400,000 workers.

Through these audits, we examine suppliers' management processes and identify nonconformances with our SER program. Our goal is to drive continuous improvement by providing our suppliers with training and support to build their internal capabilities. From our experience, this requires participation at all levels in a manufacturing facility, including factory owners, senior management, product line and midlevel factory floor managers, and workers.

For this report, we have enhanced the way we report supplier performance and our efforts to improve working conditions throughout our supply chain. Key information is reported through an interactive tool and can be viewed globally or by region. The tool aggregates the results of HP's audits and outlines the major causes of nonconformance. It also describes improvements our suppliers have made and links to case studies highlighting specific ways we’ve helped strengthen their capabilities.

In 2007, HP conducted 150 supplier audits. Of these, 92 were follow-ups to verify progress against open nonconformances found during the initial review. These verification audits focused on our key strategic suppliers with the highest procurement spending, the most nonconformances and the largest workforce. Although the verification audits demonstrated that suppliers are addressing nonconformances, some remain open because we consider the corrective actions taken insufficient or because the root cause of the issue is systemic and challenging to correct. In addition, as our auditors gain sophistication in the Electronic Industry Code of Conduct audit protocols, they are detecting new nonconformances during follow-up audits.

Total major nonconformances by EICC section for global audits of high-risk suppliers, 2005-2007 [% by section]
Health and safety 30%
Labor 25%
Labor management system 16%
Environment 12%
EHS management
General 5%
Ethics 3%


The following chart represents the top ten provisions with major nonconformances in initial audits from 97 of our key supplier sites and the improvements measured through subsequent verification audits at those sites. The data include only sites for which verification audits were conducted; these sites tend to have higher initial levels of nonconformance than other audited sites.

Percentage improvement of major nonconformances, 2005-2007 [based on verification audits of 97 sites]
Major nonconformances are Supplier management, Nondiscrimination, Dormitories and canteens, Emergency preparedness, Physically demanding work, Hazardous substances, Labor management system (1), Industrial hygiene, Wages and benefits, Working hours

See more detail in the interactive tool.


1 Includes labor/ethics risk assessment and management



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