Philips 2015 Annual Report Download - page 199

Sustainability statements 14.2.8
Annual Report 2015 199
Conict-free minerals
Responsible sourcing of minerals is an important part
of our supplier sustainability commitment and we
implement measures in our chain to ensure that our
products are not directly or indirectly funding atrocities
in the Democratic Republic of Congo (DRC).
Philips works towards the following goals:
• Eliminate all illicit minerals from the market by
steering our supply chain towards sourcing from the
conict free validated smelters only, while working
with all relevant industries to increase the number of
audited smelters.
• Enable legitimate minerals from the region to enter
global supply chains, thereby supporting the
Congolese economy and the local communities that
depend on these exports.
Conict-free minerals from the DRC
region
Many companies have ceased buying minerals
from the Democratic Republic of Congo (DRC) to
eliminate any chance of supporting the conict by
which they created a de facto embargo in a region
where mining is often the only source of income
for local communities. To help break this regional
boycott, Philips has helped set a conict free
supply chain of tin from the region. In 2015 the
project has been scaled up also to tantalum and
tungsten and 2 additional countries, currently
covering over 800 active mines. Responsibly
sourced minerals from DRC and surrounding
countries are now part of many dierent Philips
products globally.
Conict-free minerals policy and Supply chain due
diligence
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. Philips has committed not to purchase
raw materials, subassemblies, or supplies which are
found to contain conict minerals.
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 engaged with
relevant other stakeholders including the EU
institutions and local as well as international NGOs.
In 2015, we continued our work with some 400 priority
suppliers selected based on largest purchasing spend
and metal usage. Philips Conict Minerals Support
Center was set up to help suppliers in undertaking this
sometimes daunting task to investigate their long and
complex supply chains. Philips requests its suppliers to
adopt and implement a conict-free minerals policy, to
investigate their supply chain and share all smelter
names used in their supply chains to produce the
metals. Suppliers are also asked to cascade Philips’
request to only source from smelters validated as
conict free further into the chain.
We carefully review the information received via the
Conict Minerals Reporting Template from each
supplier against the Philips requirements. We
developed additional training materials in 2015 to assist
suppliers with improving their due diligence
performance, e.g. smelter data quality.
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 2015 impressive progress was made in
validating additional conict-free smelters, from 186 in
January 2015 to 253 in January 2016. Philips is actively
directing its supply chain towards these smelters. See
www.conictfreesmelter.org for more details.
After having identied smelters in our supply chain, we
published our smelter list as part of Philips’ Conict
Minerals declaration. Back in 2012 Philips was the rst
company to make its smelter list public. We did this to
drive awareness and create a call for action for smelters
and all users of these metals. We regularly update the
Philips smelter list with new information received from
our suppliers.
Conict Minerals Report
The results of Philips’ supply chain investigation,
Reasonable Country of origin Inquiry (RCOI) and
smelter analysis ndings are available in the
Philips Conict Minerals Report (CMR) which is
updated annually after the SEC ling and is available
on the Philips website.
In line with the US Dodd-Frank Act, we published the
second Philips Conict Minerals Report (CMR) in May
2015, describing our due diligence process and results.
We engaged external auditors to perform an
independent private sector audit (IPSA) of this report.
Among thousands of companies that published their
reports, Philips is one of only 6 companies that chose
to do this voluntary audit. The next update is scheduled
for May 2016.