Supply chain social and environmental responsibility

Awareness of social and environmental issues in the electronics industry supply chain is increasing among the public, our customers, NGOs, investors and the media. Our supply chain SER program responds to these stakeholder expectations. We are working to implement systems to achieve long-lasting improvements throughout our supply chain.

These stakeholders expect us to demonstrate that our long-standing commitment to global citizenship extends to our supply chain and to show evidence of improved performance and greater transparency in this area. To demonstrate HP’s commitment to continual improvement and thought leadership, this year we have disclosed a list of our key suppliers.  This list includes contract manufacturers, electronic manufacturing services providers, original design manufacturers, and commodity suppliers.  HP is sharing this list with the intent of promoting transparency and progress in raising social and environmental standards in the electronics industry supply chain.

Today, the majority of our products are manufactured for HP through alliances and partnerships. The global scope of HP’s supply chain and our value as a customer provide us the opportunity to impact the human rights, health, safety, environmental and ethical performance of the businesses worldwide that constitute our supply chain.

The expectations we set for suppliers that manufacture HP's parts, components and products, are a key aspect of our social and environmental performance. We expect our suppliers to conform to the same rigorous ethical, social and environmental standards that we hold ourselves to. Beyond product manufacturing, social and environmental impacts also occur during the transport of our products throughout our supply chain. These suppliers are the focus of HP's Supply Chain Social and Environmental Responsibility Program.

» Supplier's SER Conformance Requirements

Essential to HP’s program is our Supply Chain Social and Environmental Responsibility (SER) Policy and HP’s Electronic Industry Code of Conduct, which commit us to work with our suppliers to ensure they operate in a socially and environmentally responsible manner. HP’s approach to implementing social and environmental responsibility in our supply chain is based on early, frequent, and proactive involvement with key suppliers to develop a partnership for improvement.

To ensure that we minimize the social and environmental impact of our worldwide supply chain practices, we have:

• implemented the use of a Supply Chain Social and Environmental Policy
• adopted the use of the new Electronic Industry Code of Conduct, which formalizes hp's supplier labor, human rights, health, safety, environmental and ethical expectations
• reemphasized HP's requirement for conformance with the product content restrictions covered in HP's General Specification for the Environment (GSE)
• strengthened our supplier contract and purchasing agreements to reflect our new expectations
• communicated our SER conformance monitoring process
• conducted audits at our supplier's facilities
• developed requirements for supplier performance reporting and corrective actions for nonconformance
• implemented capability-building training programs for suppliers
• expanded performance results of supply chain SER conformance in HP's annual Global Citizenship Report

We promote sustainable improvement in our suppliers’ factories. We believe that focusing on management systems and analyzing the root causes of nonconformances increases the probability of lasting change. To achieve this, in addition to auditing our suppliers, we provide training and support to build their internal capabilities.

Sustainable change in the factory requires participation at all levels: factory owners, senior management, product line and mid-level factory floor managers and workers. During 2007, HP completed two capability building projects: the Focused Improvement Supplier Initiative (FISI) in China and the Central Europe Supplier Responsibility (CESR) Project.

Partnerships

Collaborative efforts within our industry are an effective way to leverage the work of each individual company or organization to raise supply chain standards. Suppliers generally work with several major corporate customers and when electronics companies set consistent standards, we send a stronger message and enable our suppliers to implement the standards more efficiently.

Industry groups also enable participants to share resources and knowledge, standardize tools and processes, avoid duplication of effort and develop consistent approaches to the industry’s most difficult issues. Two of the most significant supply chain collaborations are organized by the Electronic Industry Citizenship Coalition (http://www.eicc.info ) and the Global e-Sustainability Initiative (http://www.gesi.org ).   EICC and GeSI are collaborating to develop and deploy tools and processes to monitor supply chain SER performance across the information and communications technology sector.

Some of the key lessons we have learned from participating and benchmarking with various industry sector groups are:

• Multiple codes, surveys and audits increase costs and result in fatigue and fraud.
• Programs cannot be managed from U.S. corporate headquarters and require a solid understanding of the local context.
• Disagreement within an industry on a small number of issues can outweigh agreement on the vast majority of issues.
• Inspection-only and enforcement-only approaches and lack of focus on management systems fail to create long-term behavioral and sustainable change.
• Approaches must be both top-down and bottom-up and must focus on addressing root causes of issues.
• A balance of internal and external monitoring and verification can provide the most long-term change; external monitors may not be granted equal access to facilities, they may lack influence due to their non-purchasing role and they do not have the same long-term responsibility to create change.
• Standards for monitoring social and ethical compliance need to be formalized.
• It is essential to integrate the SER program into business-sourcing decisions, from qualification through potential termination.
• Capability-building programs for suppliers are essential to success.

We have made considerable investments in recent years to establish partnerships, develop processes and build systems, enabling us to mitigate our SER impact and risks, affect change, and realize tangible business benefits. We invite other electronics companies as well as customers, shareowners, governments and stakeholders worldwide to share in developing sustainable solutions that protect workers’ rights, health, safety and the environment.

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