Philips 2015 Annual Report Download - page 39

Group performance 5.2.9
Annual Report 2015 39
The list of other applicable policies can be found
www.philips.com/suppliers.
Regulated Substances List
All suppliers and brand licensees must ensure that all
products or parts and product packaging delivered to
Philips, as well as some manufacturing processes used
to make Philips parts and brand license products,
comply with the applicable requirements in this list.
Supplier Sustainability Declaration
The Declaration is derived from the Electronic Industry
Citizenship Coalition (EICC) Code of Conduct and sets
out the standards and behaviors we require from our
suppliers and their suppliers. We monitor supplier
compliance with the Declaration through a system of
regular audits.
Supplier Sustainability Audit Program in 2015
In 2015, we audited 195 of our current risk suppliers,
including 120 continued conformance audits with
suppliers that we had already audited in 2012. This
represented some one third of the number of risk
suppliers. On top of the audits with current risk
suppliers, we also audited 26 potential suppliers during
the supplier selection process. These potential
suppliers need to close any zero-tolerance issues
before they can start delivering to Philips. Below we
report on the ndings at existing suppliers only; ndings
at potential suppliers are not included in this report.
As in previous years, the majority of the audits were
done in China. Additionally, audits were performed in
Brazil, India and Mexico. A smaller number of audits
took place also in Belarus, Dominican Republic,
Indonesia, Philippines, Russia and Ukraine. These
audits directly or indirectly relate to the working
conditions of almost 116,000 workers at the production
sites that were audited.
Philips Group
Distribution of supplier audits by country
2015
143China
19India
12Mexico
6Brazil
15Other
Audit ndings
To track improvements, Philips measures the
‘compliance rate’ for the identied risk suppliers, i.e. the
percentage of risk suppliers that were audited within
the last three years and do not have any – or have
resolved all – major non-compliances. During 2015 we
achieved a compliance rate of 86% (2014: 86%).
Please refer to sub-section 14.2.8, Supplier indicators,
of this Annual Report for the detailed ndings of 2015.
Supplier development and capacity building
In 2015, we continued our focus on capacity-building
initiatives which are oered to help suppliers improve
their practices. Our supplier sustainability experts in
China organized training, visited suppliers for on-site
consultancy, conducted pre-audit checks and helped
suppliers to train their own employees.
5.2.10 Addressing issues deeper in the supply
chain
Philips’ shares the concern about issues in the mining
of minerals that are used in electronics industry
products. Areas of concern include the situation in
eastern DRC (Democratic Republic of the Congo),
where proceeds from the mining sector are used to
nance rebel conicts in the region, environmental and
safety concerns in tin mining in Indonesia, the wide
array of issues related to gold mining, and child labor in
mining in general.
Philips does not source the minerals directly and the
mines are typically seven or more tiers away from our
direct suppliers.
We were one of the rst companies to survey our
suppliers to identify smelters used in the supply chain
that produce the metals of concern, and one of the few
companies to have our SEC Conict Minerals Report
audited in 2014 and 2015.
For more details and results of our supplier
sustainability program, please refer to sub-section
14.2.8, Supplier indicators, of this Annual Report.
5.3 Environmental performance
EcoVision
Philips has a long sustainability history stretching all the
way back to our founding fathers. In 1994, we launched
our rst program and set sustainability targets for our
own operations. Next, we launched our second
program in 1998, which focused on the environmental
dimension of our operations and products. We also
started to focus on sustainability in our supply chain in
2003. We extended our scope further in 2010 by
including the social dimension of products and
solutions, which is now reected in our company vision:
We strive to make the world healthier and more
sustainable through innovation. Our goal is to improve
the lives of 3 billion people a year by 2025.
Philips publishes every year a full Integrated Annual
Report with the highest (reasonable) assurance level on
the nancial, social and environmental performance.
With that overall reasonable assurance level Philips is
a frontrunner in this eld. KPMG has provided
reasonable assurance on whether the information in
chapter 14, Sustainability statements, of this Annual
Report, section 5.2, Social performance, of this Annual
Report and section 5.3, Environmental performance, of
this Annual Report presents fairly, in all material