Philips 2013 Annual Report Download - page 205

13 Sustainability statements 13.2.2 - 13.2.2
Annual Report 2013 205
China Asia excl. China LATAM EMEA Total
Privacy - - - - -
Non-retaliation <10% <10% <10% - <10%
General
EICC Code <10% 25-50% 10-25% 50-75% 10-25%
1) Freely Chosen Employment: these cases are related to workers having to pay a deposit to their employer, which is not acceptable under the EICC Code of Conduct. We
requested suppliers to take corrective action and verified that the deposits were returned to the workers and supplier policies were changed.
2) Child labor avoidance /young worker management: this is related to A) 20 cases of young workers (16 – 18 years) working overtime hours, which is not allowed by local
laws. We requested suppliers to stop this and verified implementation of corrective action during resolving audits. B) two cases of historic child labor, where a labor
agency and a supplier hired 2 workers a couple of months prior to reaching the legal age. We requested suppliers to strengthen its management system and age
verification procedure, and ensured that the workers were enrolled in the young worker management program. If we find any cases of child labor, we require suppliers to
take immediate action according to the ILO guidelines for employers of child labor, see also our child labor policy
Implementing corrective actions
On average we see 12 major NCs per supplier audit, and work with each
supplier to resolve these NCs within 90 days where possible. Goal is to
improve the conditions in the supplier factories. Therefore, we focus on
training, supplier development and implementation of corrective action
plans with those suppliers. In exceptional cases where the supplier is
unwilling to improve, we will decide to end the business relationship,
which we did for 15 suppliers in 2013.
If Philips notices that there is a delay in the realization of the corrective
action plan by the supplier, Philips uses a stratified approach for
consequence management. Depending on the root cause why the
supplier is not taking sufficient corrective actions, Philips can decide to:
send a formal warning to the supplier; allocate no new projects; allocate
no new orders; or stop doing business.
Audit progress and targets
2013 Goals Progress
Compliance rate: 67% Reached 77% compliance rate
2014 Goals
75% of corrective actions implemented within 90 days (for major NCs found in 2014 audits)
More information on the Supplier Sustainability Involvement Program, the
Philips Supplier Sustainability Declaration and audit approach can be
found at www.philips.com/suppliers.
Supplier training and capacity building
Based on many years of experience with the audit program, we know that
a combination of audits, capacity building, consequence management
and structural attention from management is crucial to realize structural
and lasting changes at supplier production sites.
Developing risk suppliers
Since 2012 we are extending our capacity building initiatives which are
oered to help suppliers improve their practices. We organize classroom
training sessions, Philips sustainability experts regularly visit suppliers to
provide on-site consultancy and training, and we invite suppliers to
participate in trainings provided by the EICC.
This is what we did dierent in 2013 training sessions, to improve the
impact of the supplier trainings and audit results:
• Smaller groups (less than 40 attendees per training, more training
sessions, 22 full days of training were given), to enable more interaction
and dialogue with and between suppliers
• Suppliers performed self-assessments prior to the training
• Suppliers learned how to do a self-audit after the training, Philips
experts helped suppliers in this process and with the follow-up actions
In China we invited suppliers for classroom training sessions which were
attended by over 190 active and potential suppliers, representing a
workforce of more than 120,000 factory workers in total. Next to basic
training on the EICC Code of Conduct, dedicated trainings were provided
for areas where we often see weak performance during the audits, e.g. fire
safety, working hours, and management systems.
We continued our training programs for Philips buyers and quality
managers, supporting them to further integrate sustainability in their daily
work with suppliers.
Supplier training and capacity building
2013 Goals Progress
35% of active risk suppliers in China involved in supplier sustainability
development program
Supplier sustainability development program was initiated in China. 44%
suppliers are involved in sustainability development program
Worked together with Philips customers to improve sustainability performance
over multiple tiers of the supply chain, harmonizing sustainability expectations
and requirements towards suppliers.
2014
Roll-out best practices and learnings from IDH electronics program to Chinese
suppliers included in audit program
Start dedicated 3-year program to improve Health & Safety conditions in supplier
factories. Start roll-out to 20% of the Chinese suppliers in 2014
Sustainable Trade Initiative IDH
Since 2011 Philips has been an active initiator and participant in the
IDH Electronics Program, a multi-stakeholder initiative sponsored by the
Dutch government to accelerate sustainable trade by building
partnerships between leading multinationals, civil society organizations,
governments, and other stakeholders.
The IDH Electronics Program aims to support the development of
sustainable and innovative workforce management practices for over 75
suppliers. Unlike other CSR programs that have been implemented
previously in the industry, this program steers away from traditional
auditing methods and seeks to make a significant impact by building and
up-scaling the skills of both workers and management. By promoting
worker-management dialogue and helping to develop employees’ skills
and careers, the program strives to reduce employee turnover and
wastage, improve energy efficiency and improve the overall performance
of supplier factories. The goal is to improve working conditions for more
than 500,000 employees in the electronics sector.
Participating suppliers are given an ‘Entry Point Assessment’ to identify
issues that aect both factory management and employees, such as
worker-management communication, occupational health and safety,