Capability building

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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 2006, HP started two capability building projects: the Focused Improvement Supplier Initiative (FISI) in China and the Central Europe Supplier Responsibility (CESR) Project.

	Focused Improvement Supplier Initiative

HP launched the Focused Improvement Supplier Initiative (FISI) with Business for Social Responsibility's China Training Institute and several organizations with experience conducting training in China (such as Verite, ENSR, WSP, ERM and GED). The FISI program is providing monthly social and environmental management training sessions to 30 of our suppliers in China, who employee approximately 100,000 people, between June 2006 and June 2007.

Factory managers as well as managers in quality, human resources and environmental, health and safety attend the sessions. Each person receives between two and four days of mandatory training per month for a year. The FISI training sessions cover increasing productivity, working hours, wages and benefits, worker communications, management systems, root cause analysis, Chinese laws and regulations, the environment and health and safety. Suppliers provide HP with monthly progress reports of corrective actions, improvements and metrics.

	Central Europe Supplier Responsibility Project

The Partnership for Sustainable Competitiveness is a joint initiative between HP, The Copenhagen Centre for Corporate Responsibility (TCC) and the Copenhagen Business School (CBS). It is funded by the European CommissionÕs program for "Mainstreaming Corporate Social Responsibility among SMEs."

HP is working with a group of first- and second-tier suppliers in an 18-month initiative ending in November 2007 to help small suppliers develop social and environmental responsibility (SER) expertise. As in China, the goal is to help suppliers understand the connection between improved standards and business efficiency. We have completed initial meetings, assessments and training, and we have provided advice on social and environmental responsibility (SER) standards and the management systems to achieve them.

Five major HP suppliers have nominated approximately 20 of their small- to medium-size suppliers (companies with less than 250 employees) located in the Czech Republic, Hungary and Poland to participate. The suppliers listed below have provided permission for HP to recognize their participation in CESR by including them in the following table.

Central Europe Supplier Responsibility Project