Change in this area is inevitable.
Corporations today have a choice: We can sit back and wait to be regulated in ways that we might not like very much, or we can engage in a dialogue to understand the issues and help develop solutions that are sustainable for the communities and for business.
Hewlett-Packard has taken the initiative to be proactive. The following are some of the measures the company has adopted through its Supply Chain Social and Environmental Responsibility (SER) program. There are lessons here for all companies, regardless of size.
HP has 35 product divisions and logged $74 billion in revenue in fiscal 2003, ended Oct. 31. We are not a PC, printer, Unix or computer company; rather, HP is the world's leading provider of technology solutions. Our breadth enables us to provide a "one-stop shop."
With breadth, however, comes complexity, which is a challenge for our supply chain. Therefore we have created an "adaptive" supply chain that does not subscribe to a one-size-fits-all philosophy.
One of HP's objectives, right up there with profit, is global citizenship. We believe that good citizenship is good business, and we live up to our responsibility to society by striving to be an economic, intellectual and social asset to each country and community in which we do business.
To ensure our global citizenship commitment is clear to employees, customers, partners and suppliers, we created standards of business conduct for HP employees and a code of conduct for suppliers. We also have policies in human and labor rights, environmental health and safety, and supply chain SER. These provide the foundation to guide our relationship with our customers, partners and suppliers.
Our Web site will tell you that we believe in doing well and doing good. It will tell you that we are focused on invention for the common good. It will also give you the details of our work in developing our supplier code of conduct, environmental take-back and recycling programs, and so on.
But the HP Web site won't tell you that we sometimes still make mistakes or even completely miss the mark on some issue or goal, despite all we have done in this field since the 1930s. Nor will it tell you that this is hard stuff to do, and that we still face questions every day from investors, the media and partners.
Design chain issues
HP's "design for environment" program started more than 10 years ago and is underpinned by the premise that the environmental performance of our products and services is largely determined in the design stage. We have acknowledged for a long time that the environmental impact of products and services can be reduced at the design stage. At HP, stewards work across engineering and the supply chain to help reach that goal.
Examples of successes include designing printers with parts that snap together, avoiding the need for solvents and making products easier to dismantle for recycling. We even have a prototype of a biodegradable printer that is made from maize, and while we acknowledge it is a long way from production, the processes are in place where these types of things are thought of and tested.
HP has a Supply Chain Council, which consists of the top supply chain managers at the company. The council sponsors the supply chain Social and Environmental Responsibility program and is ultimately responsible for implementing it around the world.
HP is continually evolving and strengthening its SER processes and working with partners to implement common environmental practices across our extended operation.
The SER program has three pillars: product design, product content and supplier focus. The "design for environment" program has already been discussed.
Under product content, we focus on the reduction of hazardous materials--a fundamental part of HP's environmental compliance strategy. Reducing hazardous materials use can also decrease costs for our customers and HP; meet demand for smaller and more efficient products, such as handheld devices, laptops and digital cameras; and cut recycling and disposal costs.
One example in this area is the Restriction of Hazardous Substances directive adopted by the European Union (EU). ROHS will restrict the use of such substances as lead, mercury and cadmium in electrical and electronic products offered for sale into Europe after July 1, 2006.
We have chosen to openly share information regarding alternatives to such substances in electronic assemblies where the sharing of that information does not violate confidentiality agreements. To develop and demonstrate reliable, environmentally responsible alternatives, HP is actively working with our supply chain partners and others in the industry.
Product disclosure and compliance includes disclosing information relating to product safety and environmental and energy efficiency. For example, material safety data is available on most HP products, including inkjet printers and scanners; LaserJet printers and copiers; printer supplies; digital press; batteries, projectors and lamps.
HP has delivered some major milestones in the area of product take-back. To date, we have recycled more than 40 million tons of computer hardware and more than 30 million tons of LaserJet toner. This is the equivalent of more than 50,000 tons of diverted landfill.
Waste compliance is another important area where we have made great strides. We're working with industry partners to expand our program to comply with the Waste Electrical & Electronic Equipment standard, an EU program on landfill diversion that must be implemented by 2005.
HP's SER program has four building blocks:
Policy setting. Set clear management direction.
Code of conduct. Set standards and manage them.
Joint assessment. Look at this not as an "audit process" but as a chance to review where a particular supplier stands relative to expectations and requirements. Do a gap analysis if required.
Improvement planning. This is the stage where we look at what's working well and identify a plan for working on the things that require improvement.
HP's SER policy has been endorsed by senior management and applies to all HP suppliers. Putting this policy in place was not easy. Most of our 40 largest suppliers are large, multinational companies, as we are. Frankly, some of them took umbrage at being asked to sign onto our code. Others wanted us to accept their citizenship reports as proof of their adherence. Some flat out refused to sign, and discussions continue with those companies.
We felt some resistance when we asked our suppliers to provide the detailed information that we needed. We've tried to help them understand that we're not just trying to be objectionable and that we really do want to make sure their practices are within the bounds of our code.
At the end of our fiscal 2003, we had met our goal of engaging 50 suppliers. We have gotten our top 45 suppliers--representing almost 80 percent of the total we spend on product materials--on board. At this point, we've contacted an additional 100 suppliers in high-risk groups, such as chemical- and labor-intensive categories.
We work collaboratively with our suppliers to encourage compliance around the following principles:
Legal and regulatory. Suppliers must ensure that their operations and the products supplied to HP comply with all national and other applicable laws and regulations.
Continual improvement. Suppliers must integrate environmental, occupational health and safety, and human rights and labor policies into their business processes. Suppliers should establish appropriate objectives and targets, regularly assessing performance and practicing continual improvement.
Access to information. Suppliers have to provide clear, accurate and appropriate reporting to HP upon request.
We require our suppliers to sign our code of conduct and to provide information about their environmental practices, issues and plans for improvement. HP commodity managers are responsible for requiring their suppliers' adherence to our code of conduct.
We have been diligent to benchmark ourselves against industry and regulatory standards set by organizations, including:
Groups such as the Electronic Industries Alliance, National Electronics Manufacturing Initiative, World Business Council on Sustainable Development, and European Information and Communications Technology Association.
Standards groups such as the International Organization for Standardization, Social Accountability International and the Ethical Trading Initiative.
Governmental agencies such as the EPA and OSHA in the United States, various EU committees and the U.K. Environmental Agency.