Philips 2014 Annual Report Download - page 204

Sustainability statements 14.2.8
204 Annual Report 2014
Philips does not directly source minerals from mines in
the DRC or elsewhere, and the supply chain for these
metals consists of many tiers, including mines, traders,
exporters, smelters, reners, alloy producers and
component manufacturers, before reaching Philips’
direct suppliers.
Cooperation amongst these dierent tiers in the supply
chain, as well as amongst dierent industries that use
these metals, is crucial in eectively breaking the link
between mining and conict nancing in the DRC.
Therefore Philips continued its active contribution to
the Conict Free Sourcing Initiative which brings
together the electronics, automotive and other
industries to jointly improve conditions in the
extractives industry (www.conictfreesourcing.org). We
also continued our engagement with relevant other
stakeholders including the European Parliament and
local as well as international NGOs.
Philips Group
Supplier sustainability
2014
Step 1 Philips conict minerals policy and strategy
Step 2 Raise awareness and train suppliers
Step 3 Suppliers adopt conict-free policy
Step 4 Suppliers investigate own supply chain
Step 5 Report back to Philips on progress and
disclose smelter names
Step 6 Compile and publish Philips smelter list
Step 7 Assess and mitigate sourcing risks
Step 8 Report publicly about process and results
In 2014 we continued our work with 392 priority
suppliers – including 13 from discontinued operations -
to raise awareness and conduct supply chain
investigations into the metal’s country of origin. These
suppliers were selected based on largest purchasing
spend and metal usage. The Philips conict minerals
support center helps suppliers in undertaking this
sometimes daunting task to investigate their long and
complex supply chains. We work with suppliers to
clarify our expectations, provide support and training,
and share our experience and best practices.
We requested our suppliers to adopt and implement a
conict-free minerals policy, to investigate their supply
chain and to disclose to us which smelters are used in
their supply chains to produce the metals. We carefully
reviewed the information received from each supplier,
and requested follow-up in case of inconsistent or
incomplete answers. The main challenges for suppliers
were lack of awareness, limited insight and cooperation
at suppliers deeper in the supply chain in order to
identify smelters, and the adoption and roll out of a
conict-free supply chain policy.
In line with the US Dodd-Frank Act, we published the
rst Philips conict minerals report in June 2014,
describing our due diligence process and results. We
engaged external auditors to perform an independent
private sector audit on this report. Amongst thousands
of companies that published their rst year reports,
Philips is one of only 4 companies that chose to do this
voluntary audit.
“ I’m impressed that Philips went beyond
expectations with its first Conflict Minerals
Report, and pleased that the company took a
number of actions we consider ‘leading practice’.
Philips detailed the supply chain due diligence it
undertook, published a list of its identified
smelters, and was one of only four companies that
had its report independently audited.”
Patricia Jurewicz
Director
Responsible Sourcing Network
Progress identication conict-free smelters
Smelters mix minerals from many sources and rene
them into metal used in our industry. The smelter is at
a key point in the supply chain to enforce responsible
sourcing by implementing due diligence in selecting
their mineral sources. The Conict-Free Smelter
Program (CFSP) identies smelters that can
demonstrate through an independent third-party
assessment that the minerals they procure are conict-
free. During 2014 impressive progress was made in
validating additional conict-free smelters, from 64 to
121. As sucient conict-free smelters for all four metals
become available, Philips will direct its supply chain
towards these smelters. See
www.conictfreesmelter.org for more details.