Philips 2008 Annual Report Download - page 187

General Business Principles
In 2008 a total of 361 complaints were raised, compared with 389
in 2007; 392 in 2006; and 318 in 2005.
The number of complaints in 2006 and 2007 may have been affected
by two developments: the global roll-out of the One Philips Ethics
Hotline in 2006, and an updated version of the GBP Directives
approved and adopted in 2007. The hotline offers improved access
to reporting complaints, including employee anonymity and the ability
to call from outside the office. The updated Directives reflect ongoing
developments in codes of conduct and business integrity legislation.
The main updates related to Philips’ endorsement of the UN Global
Compact, policy on HIV/AIDS, health and safety policy, integrity and
ethics in advertising, and in particular directives on the giving of gifts.
As many of the alleged violations are currently still being investigated,
it is not possible to determine exactly which – if any – of the Philips
General Business Principles (GBP) have been infringed and to what
extent. However, based on careful analysis, it is possible to draw some
conclusions about those GBP that are most frequently called
into question.
Breakdown of alleged violations GBP
as a % of total
2005 2006 2007 2008
1 General commitment, total 4.3 7.2 7.0 5.2
1.0 General commitment 2.2 4.5 3.2 3.3
1.1 Human rights ––––
1.2 Child, bonded and forced labor ––––
1.3 Free market competition – – 0.5 0.5
1.4 Product safety 1.1 0.7 0.5 –
1.5 Privacy 0.5 1.7 2.8 1.4
1.6 Environmental protection 0.5 0.3 – –
2 Commitment to customers, total – 1.2 0.7 1.9
3 Commitment to shareholders, total –0.3 – –
4 Commitment to employees, total 48.1 58.8 55.8 62.9
4.0 Commitment to employees 6.7 2.2 2.8 7.9
4.1 Right to organize 1.1 0.5 1.5 –
4.2 Health and safety 1.6 5.0 2.5 3.0
4.3 Equal and fair treatment 34.1 47.1 44.3 49.4
4.4 Wages and payment 4.6 4.0 4.7 2.6
5 Commitment to suppliers and
business partners, total 8.9 5.7 2.3 2.2
6 Assets and information, total 24.2 15.6 17.0 9.9
6.1 Use and protection of assets 19.6 12.6 15.5 7.7
6.2 Improper disclosure 4.6 3.0 1.5 2.2
6.3 Insider trading – – – –
7 Business integrity, total 13.7 10.9 17.2 16.3
8 Observance of the General Business
Principles, total 0.8 0.3 – 1.6
8.1 Sanctions – – – –
8.2 Whistleblower policy 0.8 0.3 – 1.6
8.3 Compliance – – – –
100.0 100.0 100.0 100.0
In the table a breakdown of the newly filed alleged violations of the
General Business Principles are given per year. For each category the
number is expressed as a percentage of the total. More information
can be found on www.philips.com/gbp.
All alleged GBP violations (and the status of the investigations) are
considered by the Board of Management and the Audit Committee
of the Supervisory Board, which assess any possible impact on Philips’
businesses and compliance with applicable laws.
Working conditions
In 2005 the number of reported (alleged) violations related to GBP 4
(Commitment towards employees) stood at 48% of the total. This
was followed by an increase to 63% in 2008.
Another point that stands out in 2008 is the sharp rise in the
number of complaints relating to the general commitment towards
employees principle (GBP 4.0). To a large extent these originated
from employees of a number of recently acquired companies, where
the pre-acquisition style of management was in many respects
inconsistent with the underlying principles of business conduct
defined in the Philips GBP.
In 2008 the GBP most associated with alleged violations was again
GBP 4.3 (Equal and fair treatment). As in the previous two years,
almost half of all reported complaints related to this principle (49.4%
in 2008 compared with 44.3% in 2007 and 47.1% in 2006). More than
two thirds of these complaints related to two issues: respectful
treatment and discrimination. Some 35% of the complaints related
to respectful treatment and 30% to discrimination issues.
Business integrity issues
With regard to reporting of the typical business integrity issues, the
number of complaints remained fairly stable in 2008 compared to 2007.
Use and protection of assets
After having been the second most frequently received GBP complaint
in 2007 at 15.5% of the total, there was a sharp fall in the number of
complaints relating to GBP 6.1 (Use and protection of assets), with
only 7.7% in 2008. A lot of attention has been devoted to this issue,
both in the recent editions of the GBP Directives and in the latest
Corporate IT Directives. It is possible that this has helped to bring
about the necessary improvement in discipline with regard to the
handling of confidential information and Philips assets and resources.
Supply management
The number of complaints relating to supply management was
virtually the same in 2008 and 2007. Only eight complaints were
lodged in 2008 in the GBP Complaints database as alleged violations
of GBP 5 (Commitment to Suppliers and Business Partners), compared
with nine in 2007. The vast majority of supply management allegations
are related to the conduct of purchasing. For more information see
the section on Supplier indicators that begins on page 188 of this
Annual Report.
Health and safety
Philips strives for an injury and illness-free work environment, with
a sharp focus on decreasing the number of injuries. This is defined as
a KPI, on which we set yearly targets for the company and our
individual sectors.
In 2008 we recorded 650 Lost Workday Injuries cases, occupational
injury cases where the injured person is unable to work the day after
the injury. This is an 18% decrease compared with 2007. The rate
of Lost Workday Injuries also decreased substantially to 0.68 per
100 FTEs, compared with 0.81 in 2007.
Lost workday injuries
per 100 FTEs
2005 2006 2007 2008
Healthcare 0.45 0.37 0.29 0.27
Consumer Lifestyle 0.69 0.66 0.61 0.44
Lighting 1.23 1.27 1.35 1.17
I&EB 0.34 0.23 0.12 0.12
Philips Group 0.78 0.78 0.81 0.68
Reductions were particularly realized in the Lighting sector, which
initiated a dedicated action program two years ago to drive down
injury levels. Consumer Lifestyle also achieved a lower injury rate.
Philips Annual Report 2008 187
254
Corporate governance
250
Reconciliation of
non-US GAAP information
262
Ten-year overview
266
Investor information