HP uses a global network of vendors to process, resell, and recycle returned products. We have direct relationships with around 75 first-tier vendors, who in turn manage hundreds of sub-vendors in their own recycling networks.
Our stringent Global Reuse and Recycling Standards set our expectations for vendors' storage, handling, and processing of returned equipment to prevent the irresponsible disposal of potentially harmful substances. We set very high standards and, unlike most companies in the industry, publish them for full transparency. We do not allow vendors to export electronic waste from developed to developing countries for recycling. (See HP export policy.)
We contract Environmental Resources Management (ERM), a third party, to audit our first-tier vendors and ensure they conform to our standards, policies, and Supplier Code of Conduct. Audits include an assessment of environmental, health, and safety standards and performance against those standards, as well as checks on downstream material flows based on shipment and receipt records to ensure recyclable products are not sent to developing countries for processing. Increasingly, audits also focus on first-tier vendors' capabilities to audit their own sub-vendors' conformance to our standards.
When audits identify areas of nonconformance, vendors must create corrective action plans, and respond quickly to improve their performance. Once we receive a vendor's report of corrective actions, ERM conducts a repeat audit on our behalf to check that adequate action has been taken. In extreme cases we stop using vendors who lack transparency or the willingness to make the required changes.
Beyond audits, we also work with first-tier vendors to improve their performance and that of their downstream vendors. In addition, ERM's audit training program helps our first-tier vendors understand our audit process, how they should audit their vendors, and how to improve their operational performance.
Our vendor audit program satisfies and exceeds the current IEEE 1680.1 optional criteria of the Electronic Product Environmental Assessment Tool (EPEAT®), which adopt the auditing practices described in the EPA's "Plug-in to eCycling Guidelines for Materials Management." EPEAT is introducing new criteria for imaging products (IEEE 1680.2) that will require the use of recycling vendors who have obtained certification by a qualified third-party auditor. We expect the new EPEAT criteria to come into force in late 2011.
To meet this forthcoming requirement in the countries where we offer EPEAT registered products, we will only be able to use certified recyclers for imaging products. We are working with vendors to help them understand these changes and obtain certification. We engaged with governments and nongovernmental organizations (NGOs) to help shape the new requirements and ensure that certification audits are comparable with our previous vendor assessments.
Until we are confident that the quality of EPEAT certification audit protocols and practices match the quality of our audits we will supplement them with our own assessments, looking especially at downstream material flows. ERM will also continue to audit our non-certified vendors.
2010 audits and findings
Our vendor audit program went through a number of changes in 2010. We implemented a transition to industry-standard audits based on the coming changes to EPEAT (described above), and increasingly conducted observation audits of first-tier vendors' audit processes of their sub-vendors. Audit results are therefore not fully comparable with previous years. We can, however, provide the following summary of our facility audit results and program progress:
Facility audits: ERM audited 12 reuse and 25 recycling vendor locations in 17 countries on our behalf in 2010.1 Fifteen of these were repeat audits that checked for vendors' ongoing commitment and improved performance. At the re-audited sites, we saw a 36% reduction in the number of major performance gaps identified, and a 45% reduction in the number of minor gaps, in each case relative to 2009. Furthermore, three of the repeat audits revealed no major or minor performance gaps—something we have not seen in previous years.
Corrective actions follow-up: Since we began our vendor audit program three years ago, we have received and reviewed 92 corrective action plans from 125 audits. In thirteen instances, these corrective action plans addressed major performance gaps identified during initial audits. ERM repeat audits have confirmed that major issues have now been fully rectified in more than half of these cases. The other vendors have addressed some of their major performance gaps, and HP vendor managers continue to work with them to facilitate progress. The largest number of gaps found is in the area of environmental, health, and safety, followed by security, logistics and asset tracking, and then management systems and practices. These three areas combined accounted for more than 80% of the gaps found during last year's audits.
Read a statement from ERM, HP's third-party auditor for reuse and recycling vendor audits.
- 1 All initial audits were conducted on-site. Some re-audits were conducted remotely, as appropriate.