We launched our supply chain social and environmental responsibility (SER) program in 2000 with a long-term vision to help improve labor management standards, human rights, and environmental performance. We work to achieve this vision in cooperation with the companies in our supplier base.
Our strategy for prompting suppliers to address SER issues includes:
- Risk assessments Risk assessments help us prioritize how we engage with suppliers through our supply chain SER program. Suppliers also complete a self-assessment questionnaire to help us identify SER performance risks. (See Supplier management system for more information.)
- Capability building Through programs and partnerships with nongovernmental organizations (NGOs), training partners, governmental organizations, and suppliers, we help management and workers improve SER performance. (See Capability building for more information.)
- Measuring performance Our audit program (see Detailed audit findings) and other performance measurements (see Key performance indicators) reveal issues and encourage suppliers to improve SER performance by helping us target areas of concern. (See Measuring performance).
- Stakeholder engagement HP engages with stakeholders to understand and respond to issues of concern regarding supply chain SER. (See Collaboration for more information.)
The emergence of new issues, such as conflict minerals, has highlighted the need to work beyond our first-tier suppliers to improve SER performance. Collaboration across the information and communications technology (ICT) industry, and with other industries, helps us achieve this objective. (See Conflict minerals for more information.)
Introducing nonproduction suppliers
We continue to expand our supply chain SER program to include more nonproduction suppliers. Awareness of our SER program and HP's Electronic Industry Code of Conduct (EICC) has increased among nonproduction suppliers since we began our program; however, it is still low overall. We are therefore focusing on improving understanding among these suppliers. (See Supplier management system for more information.)
SER and procurement from production suppliers
The success of HP's SER program depends, in part, on the successful integration of SER issues into procurement requirements. Through ongoing relationships with suppliers, HP's procurement team is uniquely positioned to help build suppliers' understanding of how HP's SER requirements translate into business benefits. These relationships include quarterly supplier business reviews, and day-to-day engagement in a wide range of areas such as product quality, product delivery, business continuity, as well as SER. Our procurement team is trained to undertake SER performance evaluation, education, and mentoring. In 2010, HP refreshed our procurement professional training using new materials from the Electronic Industry Citizenship Coalition.
HP selects suppliers that agree to conform to the expectations and standards in HP's General Specification for the Environment, HP's EICC, and applicable laws and regulations, while meeting our other business requirements. We use High-Performance Supplier Scorecards (HPSS), which include SER parameters alongside traditional business criteria, to monitor the performance of suppliers with HP business worth more than $10 million USD. (See Supplier guidance for more information.)
We believe that higher labor and environmental standards lead to higher-quality products. They also protect our reputation and the continuity of our lines of supply by helping to ensure SER issues do not adversely affect a supplier's production capability. We believe that our sourcing needs should not result in nonconformances to our code. We recognize that lasting change takes time, however, and our suppliers must not only build their management capabilities but also often challenge a prevailing culture.
We believe that our suppliers' most senior management team needs to embrace social and environmental responsibility. In 2010, HP's General Counsel presented to 500 senior executives from approximately 125 of our largest product materials and manufacturing suppliers. The presentation focused on ethics and compliance, and the importance of setting the right management tone. We stressed the importance of investment from HP and suppliers to meet expectations, including conformance with HP's EICC.
Internal collaboration and governance
Our supply chain SER governance system defines responsibility and reporting across HP businesses and functions. All HP businesses support our supply chain SER program through the Supply Chain Board, which meets regularly and reports directly to the HP Executive Council. In 2010, senior leadership from our SER program worked with the HP Board of Directors to review our approach. (See Global citizenship strategy – Governance and management.)
Supply chain governance structure