responsible electronics 2014 presentations
DESCRIPTION
Presentations from the EICC's Responsible Electronics 2014 conference, October 1-2, 2014.TRANSCRIPT
THE ELECTRONIC INDUSTRY CITIZENSHIP COALITION welcomes you to
HP final assembly, China
Day 1 Focus: Strategy, Future
• All Day - Office hours for help on VAP, EICC-ON and the EICC e-Learning Academy
• Keynote address: Christine Bader on business and human rights
• C-Suite panel discussion on sustainable supply chains
• Lunch – 12:00 p.m. -1:30 p.m. Atrium • General Sessions – 1:30 p.m. – 6 p.m. • Welcome reception – 6 p.m. – 7:30 p.m.
Ballroom Foyer
Day 2 Focus: Implementation
• All Day - Office hours for help on VAP, EICC-ON and the EICC e-Learning Academy
• Peer Networking Roundtables 7:30 a.m. – 9 a.m.
• Breakout Educational Sessions 9 a.m. – 12:30 p.m.
• Lunch – 12:30 p.m. – 2 p.m. • Breakout Educational Sessions 2 p.m. – 5:30
p.m. • EICC New Strategic Plan: Members Town Hall
Meeting 5:30 p.m. – 7 p.m.
EICC Members Only: Friday
EICC members, join us Friday to discuss: • Working Group Roundtables 8:30 a.m.
– 10 a.m.
• Members Only Meeting 10 a.m. – 3:30 p.m.
EICC Exhibitors: Thank you!
• Bureau Veritas • Ecovadis • Elevate • Enablon • SGS • TÜV Rheinland • UL
2014: 10 Years of the EICC
http://vimeo.com/107696037
EICC Over the Past Year
• Hosted five conferences in Brussels, Shenzhen and San Francisco attracting over 1,000 attendees
• Launched the EICC e-Learning Academy • Revised Code of Conduct and VAP • Upgraded tools – EICC-ON and SAQ • Launched five publications – Conflict Minerals,
Business case for CSR, Student Workers, Carbon Product Footprinting, Working hours
• Developed EICC Strategic Implementation Plan • Reached 100 EICC members and 214 CFSI
members
HP final assembly, China
10
TRANSPARENCY IN A CHANGING WORLD Henk Campher October 1, 2014
11
Trust up but remain weak TRUST A GREAT DEAL
NGOS
BUSINESS
MEDIA
GOVERNMENT
12% 16%
2012 2013
Trust Total: 43%
Trust Total: 48%
14% 17%
2012 2013
Trust Total: 53%
Trust Total: 58%
15% 17%
2012 2013
Trust Total: 52%
Trust Total: 57%
19% 22%
2012 2013
Trust Total: 58%
Trust Total: 63%
TRUST IN INSTITUTIONS
There is a trust gap
Q11-14. [TRACKING] Below is a list of institutions. For each one, please indicate how much you trust that institution to do what is right using a 9-point scale where one means that you “do not trust them at all” and nine means that you “trust them a great deal”. (Top 2 Box, Trust a great deal and Top 4 Box, Trust) Informed Publics ages 25-64 in 20-country global total
58% 58%
43% 41% 40% 51% 47%
32% 26% 30%
65% 71%
56% 58% 52%
TRADITIONAL MEDIA
ONLINE SEARCH ENGINES
HYBRID MEDIA SOCIAL MEDIA OWNED MEDIA
Global Developed
Q178-182. When looking for general news and information, how much would you trust each type of source for general news and information? Please use a 9-point scale where one means that you "do not trust it at all" and nine means that you "trust it a great deal". (Top 4 Box, Trust) General Population in 26-country global total, Developed vs. Emerging Markets; Age breakdown for general population in 26-country global total
12
Trust in media landscape changing rapidly Youth trusts, older generations distrust non-traditional media
59% 61% 49% 47% 44%
61% 60% 48% 45% 43%
56% 56%
40% 37% 37% 54% 49%
29% 29% 31%
Traditional Media Online Search Engines
Hybrid Media Social Media Owned Media
18-29 30-44 45-64 65+
GLOBAL AGE BREAKDOWN
Many ways to use media for
trust
New opportunities for
engaging
Skepticism and dispersion requires repetition
Q165. [TRACKING] Think about everything you see or hear every day about companies, whether it is positive or negative. How many times in general do you need to be exposed to something about a specific company to believe that the information is likely to be true? (Provide Space to Insert Number) Informed Publics Ages 25-64 in 26-country global total (excludes Don’t Know Responses)
4% ONCE (1)
14% TWICE (2)
64% THREE TO FIVE TIMES
12% TEN OR MORE TIMES (10+)
6% SIX TO NINE TIMES (6-9)
29% FOUR OR FIVE TIMES (4-5)
Majority needs to hear company information 3-5 times to believe messages
35% THREE TIMES (3)
13
Use various media
channels…
86% of global consumers believe that business needs to place at least equal weight on society’s interests as on business’ interests.
Rise of Global Citizen
A>er quality and price, purpose trumps design, innova@on and brand loyalty
Consumers consistently recommend, promote and buy brands with a social purpose
There is no one “killer-‐cause” … there are many
Profit and purpose are no longer strange bedfellows
90% of people globally want brands to share
Q13: You will be presented with things that a brand could do to build and maintain a connection with you or customers like you. For each one tell us if you feel that the brands that you like are currently doing each of these things too much, just right, or not enough? [Percent of people who selected “JUST RIGHT” or “NOT ENOUGH”]
10% of people globally think brands do it well
Q15: please select the statements that you feel apply to [BRAND]. Average % who stated sharing statements applied to [BRAND]
15
The opportunity gap…
WATER
2006—2008 2000—2005 Now & Beyond
H U M A N
R I G H T S
E T H I C S
C A R B O N
Isolated risk to manage away
Linked to other operational issues
Leadership opportunity & Expectation
Not an issue (for most)
Voluntary; nice-to-do
Regulated & mandatory
Compliance issue; box-ticking
Corporate Reputation Issue
A competitiveness driver
Not free “Free” A Human Right
Issues Continuously Evolve
Chemistry Waste Compliance
Public Engagement Cloud
Our people believe passionately that what we do makes a difference for customers and our society as a whole.
Empty Messages are Dead
We are committed to being a great place to work, a thoughtful steward of the environment and a caring
citizen in the communities where we live and work. We are passionate about sustainably connecting people and
places and improving the quality of life around the world.
To us, CSR means taking steps to improve the quality of life for our employees and their families as
well as for the community and society at large. ”
“
”
“
” “
THE (PUBLIC) RELATIONS
Few areas of mutual interest, relevance and interactions
“Company A”
Co-Responsibility: Point of Mutual Interest and Start of Engagement
Major Impact Secondary audiences
Stakeholder
Major Interest
E.g. “Packaging”
Minor Impact but Major Engagement
Aim to move from centre (shared responsibility) to “extremes”
Note: Engagement points will vary from stakeholder to stakeholder. Activists, shareholders, regulators, employees, etc will all have different points of engagement.
Engagement Starting Points & Co-Responsibility
Prius CFL
Cup Toms Walmart
21
The communications game has changed
SOCIAL OWNED
HYBRID TRADITIONAL
Need for Transmedia Storytelling
Explosion of media channels
Multi-screen world
Content needs to be social and sharable
Consumers need to hear information 3-5 times to believe messages
Millennials trust non-traditional media
Technical expert in the company and person like yourself are more trusted
Influencers Amplifiers Mainstream Engagers
Co
nsu
me
rs,
Busin
ess
es,
Re
gu
lato
rs
22
Tell your story
It’s not what you stand for, its how
23
.
24
Problem:
25
Solution:
26
“Serving food with integrity.”
27
“Inspiring solutions to the environmental crisis.”
28
“Inspiring people to take small actions that
add up to big differences.”
29
DOVE – CAMPAIGN FOR REAL BEAUTY
30
LEVI’S – WATERLESS JEANS
• Not everything that is important needs to be communicated PRIORITIZE
• Remain focused on the outcomes – not shiny objects FOCUS
• The content, message, location and tone should be framed by the receiving audience
AUDIENCE
• Tactics must ladder up to strategy & it’s 2013, not 1980… STRATEGY
• Leadership is not from the middle of the pack… LEAD
• It’s 2013 … You can’t hide and you can’t run TRANSPARENCY
• It’s crowded & noisy – disrupt to break through DISRUPT
A few principles
HP final assembly, China
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
Connecting Transparency to Opportunity Ellen Jackowski October 1st, 2014
34
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
HP Living Progress Creating a better future for everyone through our actions and innovations
35
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
Seems riskier in theory than in practice
Has rewarding ripple effects
Alone is not enough
1
2
3
Transparency…
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
1. Transparency seems riskier in theory than in practice
37
2007
First weeks on the job
HP considers publishing list of suppliers
37
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
A legacy of transparency “firsts” in the IT industry
2002 Published a supplier SER code
2005 Published aggregated supplier audit results
2007 Published a list of our suppliers
2008 Published aggregated supply chain greenhouse gas (GHG) emissions
2012 Published supplier guidelines for the responsible management of student and temporary workers
2013 Published its supply chain smelter list
Published complete carbon footprint
Published supply chain water footprint
38
2014 Published complete water footprint
Published interactive supplier map with addresses, number of workers and sustainability reports
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
2. Transparency has rewarding ripple effects
39 39
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
3. Transparency alone is not enough
Take responsibility to improve Be transparent Measure it Decide what matters
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. 41
Our Carbon Footprint, 2013
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
Our Carbon Footprint, 2013
Our Carbon Goals, 2020
20% reduction
20% reduction
40% reduction
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice.
Let’s come together to solve society’s toughest challenges.
43
HP final assembly, China
Verité © 2014 – NOT FOR DISTRIBUTION
Forced Labor in the Production of Electronic Goods in Malaysia A Comprehensive Study of Scope and Characteristics
• Bangladesh: shrimp • Bolivia -‐ nuts, corn, peanuts, cattle ranching
• Burma/Myanmar – garments, services (upcoming)
• Cote d’Ivoire – cocoa growing • Dominican Republic – sugar • Ghana – cocoa growing • Guatemala – coffee, palm oil • Indonesia – fishing, palm oil • Liberia – rubber • Malawi – tea, tobacco
• Malaysia –ICT, palm oil, service • Middle East – construction, service • Philippines – bananas, fishing • Taiwan – fishing, ICT • Thailand – food manufacturing, ICT, garments
• US – peanuts, macadamia nuts, tomatoes, cattle Ranching, fruits
www.verite.org/commodities
Verité © 2014 – NOT FOR DISTRIBUTION
Verité Research on Risks & Mechanisms of Forced Labor
Research Questions
Verité © 2014 – NOT FOR DISTRIBUTION
1) Do indicators of forced labor exist in the producZon of electronic goods in Malaysia, including in the manufacture of specific electronic components and finished products? – What are those indicators?
2) Does forced labor exist in the producZon of electronic goods in Malaysia in more than isolated incidents? – In what specific components and finished products? – How widespread is each indicator in the electronics sector?
3) What is the relationship between labor brokers, recruiters, other intermediaries, and employers, in all phases of the recruitment, transportation, and placement of migrants? – What role do these actors play in forced labor, including debt bondage?
Research Design and Data Collection
• Cross-‐sectional study • Mixed-‐methods research design • Nonprobability, purposive snowball sampling • 12 researchers • 501 total workers (438 migrant workers) • Survey: closed-‐ and open-‐ended questions • Interviews conducted outside of workplace • 3-‐4 hours to recruit workers for interview; 45 minutes to conduct the survey
• Approximately 200 factories represented • 20 Follow-‐up qualitative interviews • Consultations with civil society, government, and business stakeholders
Verité © 2014 – NOT FOR DISTRIBUTION
Gender Respondents Female 270 Male 227
Country of Origin Bangladesh 36 Burma 95 India 2 Indonesia 108 Malaysia 63 Nepal 99 Philippines 9 Vietnam 89
Region in Malaysia Johor 136 Klang Valley 159 Penang 140 Seremban, Negeri Sembilan 40 Other 26
ILO Indicator Framework Indicators of Involuntariness
Strong: • DecepZon about the nature of the work
• Forced overtime • Limited freedom of movement and communication
• Degrading living conditions • No Freedom to resign in accordance with legal requirements
• Forced to work for indeterminate period in order to pay off outstanding debt or wage advance
Medium: • Deceptive recruitment
Strong: • Sexual Violence • Physical Violence • Threats against Family Members
• Other Forms of Punishment (deprivation of food, water, sleep)
• ImposiZon of Worse/Further Deterioration in Working CondiZons
• Withholding of Wages • Denunciation to Authorities
• Dismissal
Verité © 2014 – NOT FOR DISTRIBUTION
• Confiscation of Identity Papers or Travel Documents
• IsolaZon • Locked in Workplace or Living Quarters
• Constant Surveillance Medium: • Exclusion from Future Employment or Overtime
• Financial PenalZes • Extra Work for Breaching Labor Discipline
Indicators of Menace of Penalty
Forced Labor Percent in Forced Labor
Number in Forced Labor
Total No. of Respondents
All workers 28% 139 501 Foreign workers 32% 138 438 Gender Female 26% 69 270 Male 31% 70 227
Country of Origin Bangladesh 28% 10 36 Burma 28% 27 95 India 100% 2 2 Indonesia 21% 23 108 Malaysia 2% 1 63 Nepal 34% 34 99 Philippines 67% 6 9 Vietnam 40% 36 89
Region in Malaysia Johor 23% 31 136 Klang Valley 31% 49 159 Penang 29% 40 140 Seremban, Negeri Sembilan 38% 15 40 Ipoh, Perak 0% 0 8 Kedah 25% 1 4 Malacca 21% 3 14
Find
ings
Verité © 2014 – NOT FOR DISTRIBUTION
Number of forced labor indicators exhibited by all study respondents
The great majority of respondents who were found to be in forced labor exceeded the minimum threshold of one indicator of involuntariness and one menace of penalty: 81% of respondents exhibited three or more indicators of forced labor.
Find
ings
Verité © 2014 – NOT FOR DISTRIBUTION
Number of indicators Respondents not in forced labor
Respondents in forced labor
0 Indicators 133 0
1 Indicator 111 0
2 Indicators 69 26
3 Indicators 34 39
4 Indicators 14 28
5 Indicators 1 11
6 or more Indicators 0 35
Total 362 139
Find
ings
Verité © 2014 – NOT FOR DISTRIBUTION
Fees and Debt • 92% of foreign workers paid recruitment fees to get their job • 94% (of those) paid illegally or unethically high fees • 77% (of those who paid fees) had to borrow money to pay to get their job
Passport Withholding • 94% of foreign workers did not hold their passports • 71% of those did not have unrestricted access to their passports
Limited Freedom of Movement • 62% of foreign workers surveyed were unable to move about freely
Inability to Resign Contracts • 57% of foreign workers could not resign without suffering some form of penalty such as a heavy fine or losing their passport
Deceptive Recruitment • 22% of foreign workers surveyed were deceived about the terms and conditions of employment
Top Contributors to Forced Labor
Recruitment Fees Fi
ndin
gs
10 0
Range of Recruitment Fees Paid (MYR)
20
30
40
80 70 60 50
Num
ber o
f Respo
nden
ts
Number of respondents who paid recruitment fees within the given range
Verité © 2014 – NOT FOR DISTRIBUTION
• 92% of all foreign workers paid recruitment fees in order to get their jobs • Of the recruitment fees paid in home country, 92% were excessive • Of the recruitment fees paid to agent in Malaysia, 99% were excessive
Find
ings
Recruitment fee and monthly wage by
country of origin*
1000 500
0
Burma Indonesia Nepal Vietnam
* Above chart only includes fees data for respondents from countries with 80 or more respondents. Data in this figure combines both fees paid in the sending country and those paid in Malaysia (if reported separately). Not all foreign workers interviewed reported fee data.
1500
2000
4000 3500
3000
2500
Average recruitment fee (MYR) Average monthly wage (MYR)
Verité © 2014 – NOT FOR DISTRIBUTION
Indebtedness
Years working in Malaysia among respondents who reported ongoing debt
5
0
10
25
20
15
< 1 1 2 3 Years working in Malaysia
> 4
Num
ber o
f Respo
nden
ts
Number of Respondents
Find
ings
Verité © 2014 – NOT FOR DISTRIBUTION
• 77% of workers who were charged fees had to borrow in order to pay them • 95% of workers who borrowed money to pay recruitment fees took longer
than three months to pay off the debt • 50% of workers who borrowed money to pay recruitment fees took longer
than a year to pay off the debt
Debt Fi
ndin
gs
Of respondents that had not yet paid off their debt: • 92% reported feeling compelled to work overZme hours to
pay off their debt • 85% felt it was impossible to leave their job before paying
off their debt The rate of forced labor was higher among currently indebted workers than it was in the general respondent pool: 48% among current debt holders, versus 28% in the general respondent pool
Verité © 2014 – NOT FOR DISTRIBUTION
Passport retention Fi
ndin
gs
• 94% of foreign workers reported that their passports were held by the facility or their broker/agent
• 71% of foreign workers reported it was impossible or difficult to get their passports back when they want or need them
Verité © 2014 – NOT FOR DISTRIBUTION
Limited Freedom of Movement
Incidence of “limited freedom of movement” indicator among all workers and foreign workers
Find
ings
Verité © 2014 – NOT FOR DISTRIBUTION
• 62% of foreign workers reported that they are unable to move around freely and safely without their passports or other travel documents
• 35% of foreign workers reported needing a pass or permit to go beyond a certain distance from their housing
Limited Freedom of Movement and Communication Indicator
Incidence of Indicator (%)
Incidence of Indicator (No.)
Total No. of Respondents
All workers 41% 206 501
Foreign workers 47% 206 438
Living Conditions
Component analysis of living conditions indicator among foreign workers
Find
ings
Verité © 2014 – NOT FOR DISTRIBUTION
• 24% of foreign workers in the study were living in poor conditions, in housing that was provided by the broker or employer as part of the employment arrangement
• For 92% of the foreign workers that Verité interviewed, housing was provided by the employer or broker
*Note the percentages in this table are derived from the total number of respondents who answered the question.
Component of Living Conditions Indicator
Percentage with Indicator
Number with Indicator
Total No. of Respondents
Workers that sleep in a room with more than 8 people
30% 129 436
Workers who have nowhere they can safely store their belongings
43% 187 431
Workers who do not feel safe at their housing
22% 94 427
Workers that describe their living condiZons as "very bad" or "unbearable"
9% 41 437
No Freedom to Resign
Incidence of “no freedom to resign” indicator among all workers and foreign workers
Find
ings
Verité © 2014 – NOT FOR DISTRIBUTION
• 57% of foreign worker respondents reported they could not leave their job before their contract was finished because they would be charged an illegally high fine, would forfeit wages or runaway insurance, would be forced to pay the balance of the levy, would lose their passport, and/or would be denounced to the authorities
No Freedom to Resign Indicator Percentage with Indicator
Number with Indicator
Total No. of Respondents
All workers 50% 248 501
Foreign workers 57% 248 438
Levy Fi
ndin
gs
Verité © 2014 – NOT FOR DISTRIBUTION
• January 2013 – burden of per-‐capita levy shifted from the employer to the foreign workers themselves
• 70% of all foreign workers reported that they felt they could not leave their job before the levy is paid off
MYR 1,250 a year (USD 387)
Deceptive Recruitment Incidence of “deception about the nature of the work” and “decep@ve
recruitment” indicator among all workers and foreign workers according to length of @me in Malaysia
Find
ings
Verité © 2014 – NOT FOR DISTRIBUTION
Indicators of Involuntariness among all workers and foreign workers according to length of time in Malaysia
Both “deception about the nature of the work” and “deceptive recruitment”
Percentage with Indicator
Number with Indicator
Total No. of Respondents
All workers 20% 98 501
Foreign workers 22% 98 438
Workers in Malaysia for less than 1 year 32% 15 47
Workers in Malaysia for less than 2 years
29% 35 121
Workers in Malaysia for 2 years or more 20% 63 315
Employment Agents
Incidence of forced labor by who pays workers’ wages
Find
ings
Verité © 2014 – NOT FOR DISTRIBUTION
Who pays workers’ wages
Incidence of Forced Labor (%)
Incidence of Forced Labor (No.)
Total No. of Respondents
Employment agent 34% 63 185
Facility 25% 76 309
Other 0% 0 3
RELA
Incidence among foreign workers of encounters with immigration authorities, police, or RELA and nature of such encounters
Find
ings
Verité © 2014 – NOT FOR DISTRIBUTION
• 70% of foreign workers that had encounters with RELA, immigration officials, or police were forced to pay bribes, were detained, or were threatened with detention, physical harm, or general intimidation.
*This number is not the sum of the numbers in this column because it was possible for workers to report more than one type of encounter with immigration authorities, police, or RELA .
Nature of encounters with immigration authorities, police, or RELA
Percentage with Encounter
Number with Encounter
Total No. of Respondents
Workers who have been asked by immigraZon authorities, police, or RELA to show their passport or similar document
35% 154 438
Workers who paid bribes to immigraZon authoriZes, police, or RELA
11% 49 438
Workers who were threatened with detention, physical harm, or general intimidation by immigration authorities, police, or RELA
26% 115 438
Workers who were detained or brought to lockup by immigraZon authoriZes, police, or RELA
3% 15 438
Migrant workers in past year who had an encounter with immigraZon authoriZes, police, or RELA
46% 203* 438
• Nepalese man, working in Penang • Recruitment fee: NPR 130,000 (USD 1,266) • Loan from a creditor with a monthly interest of 5% • Family land as collateral • Passport taken upon arrival; stopped by police and
RELA a few Zmes • Take-‐home after deductions: MYR 750 (USD 232) • Deceptive Recruitment:
– Passport retenZon policy – Take-‐home pay – Employer
• 2 years to pay off loan; compelled to work overZme
Bishal C
ase
Stud
y
Verité © 2014 – NOT FOR DISTRIBUTION
…….for tomorrow Addressing forced labor risks
66 Verité © 2014 – NOT FOR DISTRIBUTION
Oct 2, 2014
Establish criteria
Business Requirements • Ability to source quality
workers; quantity required; within a specified timeframe
• Competitive price
Legal Requirements • Compliance to law • License to operate business
Social Responsibility Requirements • Limit to recruitment fees • Presence of Code of
Conduct, with policies and procedures for enforcement
Ris
k co
ntro
ls
67 Verité © 2014 – NOT FOR DISTRIBUTION
Conducting Labor Broker Due Diligence • Thorough background check of sending country agent (SCA)
• Ensure SCA compliance to own country laws • Review Complete SCA’s recruitment process review vs. Code of Conduct
• Educate SCA key people on Code of Conduct, social responsibility standards
• Establish ongoing performance management of Labor Brokers
Ris
k co
ntro
ls
68 Verité © 2014 – NOT FOR DISTRIBUTION
Verification of Fees and Expenses
Pre-‐departure & Deployment
Provide jobseekers with checklist of all incurred expenses
Set up accessible hotline
Upon arrival
Require new hires to submit a list of
expenses
Conduct validation interviews
Develop tools for validaZon interview &
train interviewer
On-‐site follow-‐up
Monitor grievance channels
Set up Hotline number
Create Non-‐reprisal policy
Communicate Broker-‐ born sanctions
Ris
k co
ntro
ls
25 Verite © 2013 – NOT FOR DISTRIBUTION
HP final assembly, China
71
The Electronic Industry Citizenship Coalition
2014 SENSING ASSESSMENT MAP
2014 Sensing Assessment Objectives
Given the increasing breadth of electronics supply chain sustainability issues that the EICC has taken on in the past several years, the EICC conduced a “sensing” exercise to prioritize these issues for the purposes of:
q Informing the organization’s annual activities, strategy, and budget planning
q Providing broad guidance to its corporate members about current and future industry trends and issues that may also be increasingly relevant to them
72
The EICC engaged BSR to conduct this sensing exercise not only to help prioritize current and emerging sustainability issues in the electronics supply chain, but also to develop a replicable methodology that could be used by the EICC for future assessments.
What Sensing IS and IS NOT
73
What the Sensing Assessment
IS
• An inside and outside view of which issues or processes may be most important for EICC member companies
• A relative ranking of issues or processes that establishes “direction” for prioritization
• An assessment to inform EICC planning and strategy
• An assessment to help the EICC and EICC member companies integrate sustainability deeper and more consistently across their respective organizations, and maximize decision-making and impact
What the Sensing Assessment
IS NOT
• A static assessment (I.e. sustainability issues or processes may shift in significance over time as society and business change)
• An assessment that tells the EICC and EICC member companies what to do on each sustainability issue or process
• An assessment that tells the EICC and EICC member companies how well they are performing on each sustainability issue or process
• A complete list of all sustainability issues or processes
• A precise, exact science
Sensing Issue List
74
1. Forced Labor and Human Trafficking 2. Child Labor 3. Nondiscrimination and Humane Treatment 4. Fair Wages 5. Freedom of Association and Collective Bargaining 6. Working Hours, Holidays, and Leave
1. Diversity, Inclusion, and Equal Opportunity (Including Women Empowerment)
2. Training, Career Advancement, and Capacity Building 3. Fair Recruitment, Temporary, and Student Labor 4. Employee Benefits and Social Security 5. Social Dialogue, Grievance Mechanisms, and Remediation 6. Health and Safety (Including Occupational, Fire, and Building
Safety) 7. Safe Use of Process Chemicals
1. Climate Change 2. Water Resources Management and Sanitation 3. Biodiversity Impacts 4. Environmental Impact Assessment 5. Effluents, Pollution, and Waste Management 6. Environmental Accidents, Grievances, and Remediation 7. Energy Management and Systems 8. Fuel, Logistics, and Transportation 9. Material and Resource Use Optimization
1. Transparency, Reporting, and Accountability 2. Compliance and Audits 3. Business Ethics and Fair Behavior 4. Anti-corruption 5. Procurement Policies and Practices 6. Respect for Property Rights (Including Intellectual Property) 7. Privacy and Data Protection 8. Conflict Minerals
1. Human Rights Due Diligence and Impact Assessment 2. Community Involvement and Development 3. Stakeholder Engagement 4. Access to Essential Goods and Services 5. Disaster Risk Reduction & Emergency Preparedness
Labor Rights
Labor Practices
Environment
Governance and Ethics
Community
Importance to EICC Member Companies: The degree to which a supply chain issue (or process) is important to EICC member companies’ business success. • Quantitative / External Data (66%)
• EICC Member Sensing Survey (33%) • EICC SAQ and VAP Aggregate Findings (33%)
• Qualitative Analysis (33%)
Sensing Assessment Criteria
75
Importance to Supply Chain Sustainability: The degree to which a supply chain issue (or process) is important to sustainability or broader sustainable development objectives in the electronics industry supply chain. • Quantitative / External Data (66%)
• EICC News and Media Monitoring Mentions (33%) • EICC Transparency Taskforce External Stakeholder Survey
(33%) • Qualitative Analysis (33%)
76
Importance to EICC Member
Companies
33%
33%
33%
Importance to Supply Chain Sustainability
Quantitative / External Data
Qualitative Analysis
EICC Member Company Sensing Survey Results
SAQ Annual Results
VAP Annual Results
Cost Efficiency Reputation Supply Chain
Stability Worker
Productivity
Regulatory Requirement
Investor Demand
Business Innovation
License-to-Operate
Scope Scale Remediability Likelihood Vulnerability
News Media Mentions
EICC External Stakeholder Survey Results
EICC Compliance
Economic Development
Quantitative / External Data
Qualitative Analysis
33%
33%
33%
EICC 2014 Sensing Assessment Criteria
77
EICC 2014 Sensing Assessment Map
Sensing Discussion Questions
78
q Are there any surprises?
q Which of these issues are emerging and which of these issues have been around for a long time (but we haven’t effectively addressed?)
q Should the EICC be working on all of these issues? Which issues should be accounted for?
What Members Say EICC Should Do
79
79%
61% 55%
39% 38% 31% 30% 25%
0%
20%
40%
60%
80%
100%
Dev
elop
bes
t pra
ctic
e gu
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Dev
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and o
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Average Response Percent (n≈68)
Other Key Information Sources
80
q EICC Code of Conduct (Version 4.0) q EICC-FSG Senior Executive Advisory Committee
(SEAC) Strategy Direction Report q Global Reporting Initiative G4 Sustainability
Reporting Guidelines q Sustainability Accounting Standards Board
(SASB) Disclosure Topics for the Technology and Communications Sector
q ISO 26000 Social Responsibility Standards q Fair Labor Association Code of Conduct q UN Guiding Principles on Business and Human
Rights
HP final assembly, China
ALTERNATIVES TO AUDITING: SOLVING WORKPLACE PROBLEMS THROUGH COMMUNICATION David Foust, CEREAL
Monique Lempers, IDH
Marcel Jacobs, Philips
MOVING BEYOND AUDITS
¢ Rising sense of need to move beyond audits � Audits help identify problems, but not solve them � Solving requires additional efforts
¢ Investments in communication facilitate subsequent factory improvements � Rossi, Arianna and Robertson, Raymond (2011)
“Better Factories Cambodia – An Instrument for Improving Industrial Relations in a Transnational Context” in Papadakis, Konstantinos (ed.) Practices and Outcomes of an Emerging Global Industrial Relations Framework, Palgrave Macmillan and the ILO.
MOVING BEYOND AUDITS
Audits Audits
MOVING BEYOND AUDITS
Communication
Working Conditions
Survival
EFFECTS OF IMPROVING CONDITIONS
¢ Apparel Industry: Better Work � 7 countries � Data from Cambodian factories
¢ Compare improvements in working conditions with factory survival
¢ Improvements in several areas correlated with improvements in factory survival rates
¢ Other similar results point in the same direction: improvements in working conditions are correlated with improved factory performance
KAPLAN-MEIER SURVIVAL ESTIMATES 0.
000.
250.
500.
751.
00
0 2 4 6 8 10analysis time
upc_10 = 0 upc_10 = 1
Payment_of_Wages
0.00
0.25
0.50
0.75
1.00
0 2 4 6 8 10analysis time
upc_18 = 0 upc_18 = 1
Aid
0.00
0.25
0.50
0.75
1.00
0 2 4 6 8 10analysis time
upc_26 = 0 upc_26 = 1
Chemicals0.
000.
250.
500.
751.
00
0 2 4 6 8 10analysis time
upc_28 = 0 upc_28 = 1
Overtime
HOW CAN WE IMPROVE COMMUNICATION?
¢ David Foust, CEREAL Presentation of a workers’ experience in the factory and how worker-management communication can resolve workplace issues
¢ Monique Lempers, IDH Presentation of IDH’s electronics program emphasizing working-management communication in China
¢ Marcel Jacobs, Philips Presentation of Philips’ new approach on 'beyond audits' incorporating supplier development, LEAN and worker-management dialogue
PANEL FORMAT
¢ 25 minutes for each presentation ¢ Questions and Answers following
HP final assembly, China
TOWARDS A BETTER AND MORE EQUITABLE COMMUNICATION RELATIONSHIP BETWEEN WORKERS AND MANAGEMENT
David Foust Rodríguez CEREAL (Center for Labor Studies and Action) Responsible Electronics, EICC, Oct 2014
HUMAN RESOURCES AND HUMAN’S RIGHTS
“We were sold to the
new company without been asked”.
OPEN COMMUNICATION BETWEEN WORKERS AND MANAGEMENT
¢ Is this “the best way”…? (Why?, how?, for whom?)
¢ Three different scenarios: � An individual worker approaches management to
deal with a grievance, without a clear / effective grievance mechanism.
� An individual worker approaches management …, with a (more) effecctive grievance mechanism in place.
� A worker can approach management with the support of a workers’ organization / representative; this communication relationship is framed in a clear and effective grievance mechanism.
WE LISTEN TO A WORKER’S EXPERIENCE…
THE DIFFERENCE BETWEEN THE THREE DIFFERENT SCENARIOS
¢ In the first scenario, the solution (type, timing, etc.) is up to the company almost entirely.
¢ In the second scenario, the introduction of a more or less clear set of rules and timing (GM) and of a new entity (CEREAL, for example) gives the relationship a little more balance.
¢ But in the third scenario, the worker has the support of a workers’ organization / representative (not / not only from someone outside the workplace). This relationship is better and more equitable.
HP final assembly, China
Higher performing suppliers
through
advanced worker management dialogue
October 2014; EICC conference
The IDH program brings together public and private partners
A shared value approach to a
serious business risk
The new generation of Chinese workers is more self-confident and empowered!
With little space for sharing and discussing demands &frustrations, workers leave or strike !
In 2014 we saw a 30% increase of strikes in China, most in the manufacturing sector !
A high turnover of >33% comes with a cost!
Source: salary & employment forecast China 2014, Michael Page
Source: ELEVATE 2013
Opening up dialogue is key to manage these risks, by releasing pressure and increasing satisfaction!
The philosophy behind this is to create shared value between the business and social agenda!
We measure impact on dialogue &
workers satisfaction and linkages with business values
Worker Satisfaction Index Comparison by Supplier
Factory No. Overall Scale (1-‐10)
Working Relationships
(0-‐100)
Wage Fairness and Transparency
(0-‐100)
Working Hours(0-‐100)
Facilities(0-‐100)
Health and Safety(0-‐100)
Career/Personal Development
(0-‐100)Below Average
6.39 67.77 62.92 41.54 56.72 65.54 62.26Above Average
1 5.71 62.87 54.49 31.70 51.42 57.82 55.002 8.00 78.62 77.24 77.25 72.29 85.56 70.553 7.55 77.88 77.76 58.23 69.59 82.46 72.094 6.22 66.65 60.48 28.14 60.33 74.90 57.805 6.53 65.69 72.33 48.45 66.57 60.71 53.916 6.70 69.84 70.50 45.38 61.80 71.74 59.787 6.21 62.70 57.77 59.64 56.87 59.87 52.708 8.27 83.73 83.05 67.11 80.70 90.84 77.979 5.40 64.40 54.23 29.25 49.32 45.56 52.4610 5.68 63.08 57.64 33.67 56.27 61.18 45.2311 6.33 68.08 67.81 37.09 58.94 60.23 64.0912 6.34 64.53 63.67 59.93 56.09 56.22 57.5513 6.04 66.39 65.29 10.26 64.51 67.88 61.6614 5.67 63.18 63.92 23.40 46.57 59.08 55.0015 6.20 67.32 65.92 28.97 61.34 64.49 58.3316 6.30 67.59 60.22 24.95 65.44 69.91 65.2717 7.04 70.20 71.44 59.06 60.51 77.69 63.4118 6.70 66.59 70.02 41.89 62.65 73.20 64.3819 5.26 65.26 48.72 17.89 46.52 41.99 63.03
Worker satisfaction is measured and benchmarked!
Non-worker representative comm systems Employees informed of enterprise policies 3 4 1
Employees give suggestions & report problems 3 3 3
Employee view of outcomes 2 3 2
Employee trust in management 4 5 4
Management use of comm system 2 5 3 Rep system & roles Rep structures 1 2 1 Confidence in reps 3 5 1.5 Depth of worker rep role 2 2 1 Depth of worker rep role 2 1 1 Representation & participation S/election of employee reps 4 4 1 Employee reps & employees 2 I 3 2 Scope of discussion 3 3 2 Degree of employee participation 2 3 2 Resources Time 2 2 3 Funding 2 1 2 Peer network 3 5 3 Info 3 4 4 Knowledge & soft skills Openness 3.33 4 4 Respect 3.67 4 4 Spirit of compromise 1.5 3 5 Objectives & outcomes Alignment 1.67 2 5 Problem solving 3 4 5 Difficulty 4 3 1
Non-rep comm systems 56% 80% 52%
14 20 13 Rep systems 51% 61% 53%
46 55 47.5
Strong worker reps,
no clear role
Dialogue maturity is quantified (darker colour = higher scoring)
Supplier #1 Supplier #2 Supplier #3
Low investment in systems
High compromiseon easy issues
Well informed by management
Respectful discussion, limited compromise
Some discussion difficult issues, limtd compromise
Correlations social & business drivers analyzed
R² = 0.51036
0%
20%
40%
60%
80%
100%
0% 20% 40% 60% 80% 100%
% of e
mployees w
illing to work
harder to
aaain bo
nuses
% of employees who trust management
Higher trust = higher work ethic
Buying companies are benchmarked on their suppliers’ performance to identify tailored action
First signs of impact are there
Dialogue is improving in a group of suppliers!
Management better informed and able to justify directions
Compromises and improvements
are made
Management more pro-active in seeking employees opinions
Workers feel engaged and share their true concerns
Workers understand pragmatic solutions, open to compromise
Workers and management satisfied
on positive engagement
Positive experiments in workers’ representatives systems!
First signs of improved working conditions
Worker Turnover (%) Worker turnover is now showing a clear downwards trend, which is even more significant if seasonal spikes at CNY and summer workers are considered.
Turnover is showing a downwards trend, from 16,5% to 14%
Challenges for the future
Not all companies see (yet) the (business) benefits of their investments in dialogue!
Key is to further identify and strengthen the link between social and business performance!
Business performance
Social performance
Less w hours and/or higher wages make business sense when part of higher efficiencies (like lean)!
Higher producZvity & less hours
Less peaks & less
overZme
Higher efficiencies require worker engagement & dialogue providing insights for smarter processes!
Less rework & smart
efficiencies
Worker engagement
& input
Advanced dialogue is a key pillar for managing risk.
In productivity improvement theory & practice dialogue is also
a key pillar for higher business performance.
Linking business performance to social performance is the unlocking move to increase impact in the supply chain.
HP final assembly, China
October 2nd , EICC Conference, San Francisco, Philips Group Procurement 123
Beyond audiZng, what’s next? EICC event Burlingame
Marcel Jacobs Director Supplier Sustainability, Philips Group Procurement October 2nd, 2014
October 2nd , EICC Conference, San Francisco, Philips Group Procurement 124
The world around us is rapidly changing, what are we waiZng for? Will we decide our direcZons and target areas or will others do so?
October 2nd , EICC Conference, San Francisco, Philips Group Procurement 125
How effecZve is your supplier sustainability audit program? New strategy developed towards end2end collaboraZon and conZnuous improvement
Today; • Recognize limita@ons of audits • IdenZfy new approaches to manage impact and structural improvement
Tomorrow; • Drive operaZonal excellence by engaging your supplier’s employees (Dialogue)
• Support supplier’s HRM skills and systems (Capability)
• Develop relaZonships with NGO’s and trade unions (Understanding)
• Implement scorecard (Transparency)
October 2nd , EICC Conference, San Francisco, Philips Group Procurement 126
Stakeholders want to see improvements Shareholders increasingly want a sustainable and transparent Supply Chain (ESG)
October 2nd , EICC Conference, San Francisco, Philips Group Procurement 127
Summarizing
Audit Supplier’s Social Compliance
IDH-‐WMD v1.0
Manage Impact; Address Social and Business Value Add
Today Tomorrow
October 2nd , EICC Conference, San Francisco, Philips Group Procurement 128
Thank you
HP final assembly, China
VECTRA International – Enabling Positive Impact
Huge, complex, interwoven " Agriculture / Manufacturing / Services
ü (information / human)
" An industry made up of companies that primarily earn revenue through providing intangible products and services (ref. Bus. Dic)
" 4 characteristics: ü Intangibility: services deliver performances not physical objects. ü Perishability: service capacity cannot be stored for sale in the
future. ü Inseparability: Services are generally created or supplied
simultaneously. ü Variability: Services are highly variable. Their quality depends on
who provides them and when and where they are provided
130
VECTRA International – Enabling Positive Impact
Sources WorldBank / IMF) 2014: 1.2 billion people
VECTRA International – Enabling Positive Impact
Pulling apart the complexity " A different way to distinguish
ü Retail/consumer support ü Direct facilities “product” support ü Human resource support ü “IP”, mgmt, communications support ü Secondary support
" Global Industry Classification Standard (GICS) / Industry Classification Benchmark
132
VECTRA International – Enabling Positive Impact
Risks are very different " Retail/consumer support
ü Telecentres/retail centres ->L/E
" Direct facilities “product” support ü Catering/maintenance – L/EHS
" Human resource support ü Labor agents/security agents –> L/E
" “IP”, mgmt, communications support ü Design/marketing/consultants ->E
" Secondary support ü Travel/hospitality -> ???
Thought: risk prioritize based on narrow Global Industry Classification Standard (GICS) / Industry Classification Benchmark within EICC membership scope
133
HP final assembly, China
The ISS Way
October 2014
Who are we?
" Global leader in facility services offering single, multi and integrated services
" Presence in 50+ countries
" Self delivery capabilities with more than 530,000 employees globally
" Site based business for approximately 80% of revenues
" Recurring 75-80% portfolio based revenues offering strong revenue visibility
" Growing share from
" Emerging markets
" Integrated facility services (IFS)
" Global/regional contracts
Facilities Management (FM)
Support
Security
Cleaning
Catering
Property
136
Single service
Single service
Single service
Single service
How we differentiate ourselves
137
Facility Management
Subcontractor
Subcontractor
Subcontractor
Subcontractor Facility
Management Provider
or So
lutio
ns to
out
sour
ce
Value added offering " Credible and effective risk
management, including HSE and local labour law management
" Brand protection
" Efficiencies and financial certainty
" Sustainability and transparency
Delivery capabilities " Single Service Excellence
" Consistent delivery globally
" Flexible delivery model
What the customer needs
Integration of services " One point of contact -
convenience
" Further efficiencies
Self-delivery
Corporate Responsibility
" We are signatory to the United Nations Global Compact
" TEN universally accepted principles in the areas of:
" Human Rights
" Labour
" Environment
" Anti-Corruption
Stakeholder assessment
139
Material issues
140
CR issues
Human rights Labour rights
Environment Anti-corruption
Health & safety
Work time overtime Security
Responsible sourcing
Freedom of association
Child Labour Discrimination Wage
Harassment
Chemicals
Waste
Water
Energy
THANK YOU
HP final assembly, China
United States 29 Canada 3 Mexico 1 Panama 3 Colombia 2
Brazil 3 Nicaragua 2 Netherlands 2 United Kingdom 7 Italy 1
Denmark 1 Germany 7 Spain 12 Portugal 3 Serbia 1
France 4 Morocco 4 Poland 1 Bulgaria 1 India 5
Philippines 12 Australia 1 New Zealand 2
Sitel global footprint Sitel’s soluZons span 110+ domesZc, nearshore and offshore centers in 23 countries across North America, South America, Europe, Africa and Asia Pacific.
Founded
1985
Countries 23+ LocaZons
110+
Revenues
$1.4b
Employees 58,000
Languages 40
Experience shared.
-‐ 145 -‐
Challenges • Global versus local approach • Respect to local differences (client local
requirements and legal/regulatory obligaZons) • Consistency across a global footprint • Raising awareness globally (embedding
standards with new recruits) • Local ownership of the program • MulZple industries • MulZple standards – SMETA/EICC • Global deployment (flexible and scalable
framework)
Experience shared.
-‐ 146 -‐
Global management system
• Legal and other requirements • Risk Assessments
• Improvement objecZves, plans and measures
Do How we do it?
• Management accountability and responsibility
(Management Review)
Plan What we need to do?
• Management accountability and responsibility
• Processes and Procedures • Training and CommunicaZon
• Employee parZcipaZon
Check Have we done it?
• Audits and Assessments • CorrecZve AcZon Process
• Employee Feedback • Documents and Records
Act How are we managing it?
Plan
Check Act
Do
Experience shared.
-‐ 147 -‐
OHS risk assessment • Summary table: high level overview of the
potenZal risks and required treatment
Experience shared.
-‐ 148 -‐
OHS risk assessment • Assessment of the level of control for each risk
area (feeds back to the summary table)
Experience shared.
-‐ 149 -‐
SR risk assessment • Assessment of the level of control for each risk
area (feeds back to the summary table)
Experience shared.
-‐ 150 -‐
Risk management • Risks are rated based on the impact, the
probability/prevalence and the current control level
• Simplified CAPR approach: • Social Responsibility
> Labour (05 risk areas) > Ethics -‐ AnZ CorrupZon (06 risk areas) > Ethics -‐ Human Rights (14 risk areas)
• Environmental > Pollutants (10 risk areas)
• Health & Safety > Hazards (27 risk areas)
Experience shared.
-‐ 151 -‐
How could EICC help? • Single audit for EICC members operaZng in the
same locaZon • Lighter/targeted approach for service providers
(applicability/risk weighZng) • Standardize contractual requirements • Accept comparable standards, subject to
minimum principles (SMETA)
HP final assembly, China
Intel Confidential — Do Not Forward
Look Inside, Explore Intel
Anisha Ladha
October 2, 2014
Explore: What we will Cover Today • Company Snapshot • Sustainability Approach • Transparency • Shift the Transparency Paradigm • Current State • Improvements • Challenges • What is Next • Engaging for a Sustainable Future
154
Intel Snapshot
Year founded: 1968
Number of employees: >107,000
Revenues: $52.7 Billion (2013)
Products and services: over 450
Stock symbol: INTC
Worldwide offices and facilities: 294
Intel is the world's leading innovator in advanced silicon technology, with more than 40 years of leadership in computing and communications.
According to BusinessWeek and Interbrand Intel is the world’s 5th most valuable brand
The Intel audio signature is heard somewhere in the world every five minutes
“In the coming decade, Intel will create and extend computing technology to connect and enrich the life of every person on earth.”
Caring for the People and the Planet
Our approach for the coming decade • Pursuing a gentler footprint • Innovation for the planet • Engaging for a sustainable future
Intel’s Approach to Sustainability
We estimate that Intel technology will enable the billion PCs and servers installed between 2007 and 2014 to consume half the energy and deliver 17 times the compute capacity of the first billion PCs and servers.
157
Hi-K Metal Gate
Strained Silicon
3D Transistors
65 nm
45 nm
32 nm
22 nm
14 nm
10 nm
7 nm
90 nm
Enabling new devices with higher functionality and complexity while controlling power, cost, and size
Executing to Moore’s Law
1968 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
A History of Transparency
Driving continuous improvement in performance and governance
GRI
GRI G2
GRI G3
First EHS report and public goals
Stakeholder engagement and ‘SRI road shows’
CSR business function
Board-level responsibility established
First full CSR report
Culture & values established
CSR in ‘global strategy on a page’ & link pay with CSR
CSR Mgmt Review Committee
CSR blog and integration into AR/10K
GRI G3.1
CSR report limited assurance provided by Ernst & Young
10th CSR report
Explore Intel
Transparency and Engagement
Close
Heat Noise
Noise Traffic Spills
Abatement
Same City
Energy E-waste
Air pollution Water use/pollution Local infrastructure
Country Level
Global warming E-waste
Global warming Chemical
Management Water use/pollution
Fab
Product
Our Focus: The Local Community
Paradigm Shift
The Road to Transparency
Look Inside, Explore Intel
161 http://exploreintel.com
Look Inside, Explore Intel New Mexico
162
http://exploreintel.com/newmexico
New Mexico Real Time Data
163
http://exploreintel.com/newmexico
The Road Less Travelled
164
Look Inside, Explore Intel Ronler Acres
165
http://exploreintel.com/ronleracres
Site Data
166
http://exploreintel.com/ronleracres
Site Quarterly Data
167
http://exploreintel.com/ronleracres
Ronler Acres Photo Gallery
168
/
Ronler Acres Video Gallery
169
/
Improvements Along the Way Changes to the Home Page Standardization Data Consistency Local Weather Information
170
Ronler Acres Real Time Weather Data
171
/
172
What is next…. Continuous Improvement • Additional Standardized Reporting • Changes to the Real Time Data
Notification Page
173
Engaging for a Sustainable Future
174
• Engage with your Local Community
• Start Small, but Think BIG.
• Harness the Power • Collectively we can
make a Bigger Difference.
Thank You!
Intel Confidential — Do Not Forward 176
HP final assembly, China
OFAC and Other Legal Compliance Issues Involved in Managing Supply
Chain Traceability
Peter Lichtenbaum Covington & Burling LLP
October 2, 2014
A Presenta4on for the Electronic Industry Ci4zenship Coali4on (EICC)
Privileged & ConfidenZal
Overview I. North Korea Trade Controls Issue in Dodd-‐Frank Reports II. IntroducZon to Trade Controls and the Office of Foreign
Assets Control (OFAC) III. Specific Issues Related to Conflict Mineral Disclosures
(SancZons and the Specially Designated NaZonals List) IV. Other Legal Compliance Issues V. Best PracZces VI. QuesZons
179
Privileged & ConfidenZal
180
U.S. Dodd-‐Frank Repor@ng Requirements Regarding Conflict Minerals
• SecZon 1502 of the Dodd-‐Frank Act requires public companies to annually disclose to the U.S. SecuriZes and Exchange Commission (“SEC”) informaZon about their use of specific minerals originaZng in the DemocraZc Republic of the Congo (“DRC”) or in countries adjoining the DRC.
• Companies’ enZre global supply chains are subject to this due diligence requirement.
• Regulated Minerals: Gold, tantalum, Zn and tungsten
• Regulated Countries: Angola, Burundi, The Central African Republic (“CAR”), The Republic of Congo, The DemocraZc Republic of Congo, Rwanda, South Sudan, Tanzania, Uganda, and Zambia
Privileged & ConfidenZal
181
U.S. Dodd-‐Frank Repor@ng Requirements Led to Trade Controls Issue for Companies
• In their Dodd-‐Frank conflict mineral disclosure reports, several companies listed North Korea’s central bank as a gold refiner in their supply chain.
• U.S. trade controls law includes sancZons prohibiZng the import of materials from North Korea, regardless of where in the supply chain the materials are introduced or what form the materials take when received by end-‐users.
• The companies involved have since conducted further invesZgaZon. As publicly reported, some determined that their products did not contain gold from a North Korean smelter. Others determined that any use of a North Korean refiner occurred more than five years ago.
The Importance of Knowing Your Supply Chain
Privileged & ConfidenZal
182
What are Trade Controls? • Sanc@ons (OFAC): Generally, prohibiZons on U.S. persons’ trade,
financial, and investment dealings with sancZoned markets, enZZes, or persons. SancZons also forbid U.S. persons from “facilita4ng” (broadly defined) acZviZes by non-‐U.S. persons that a U.S. person could not lawfully engage in.
• Export Controls (ITAR/EAR): RestricZons on the supply of products, so�ware, and technology:
– To various countries due to naZonal security, foreign policy, or nonproliferaZon concerns;
– To idenZfied parZes subject to parZcular restricZons; and/or – For end-‐uses that raise policy/security concerns.
• Enforcement: ViolaZons of trade controls law can result in civil or criminal penalZes, and very large penalZes have been imposed by U.S. agencies. Other potenZal consequences include denial of export privileges and reputaZonal damage.
The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) implements regula@ons that may be implicated by conflict mineral disclosures. • Programs: OFAC issues economic sancZons against countries and individuals.
– Comprehensive sancZons prohibit virtually all business and financial dealings with targeted countries: Cuba, Iran, Sudan, Syria.
– Other countries are subject to more limited sancZons (ex: Burma, North Korea, Russia).
• In most cases, OFAC regulaZons apply to “U.S. persons,” meaning:
– Any enZty organized under the laws of a U.S. jurisdicZon, including a foreign branch/office of a U.S. enZty;
– Any individual who is a U.S. ciZzen or permanent resident, wherever located or employed; and
– Any individual or enZty physically present in the United States, including a U.S. branch of a non-‐U.S. enZty.
• SancZons against Iran and Cuba also apply to enZZes “owned or controlled,” directly or indirectly, by U.S. persons. 183
Privileged & ConfidenZal
OFAC Enforcement Tools and Consequences • Tools: OFAC enforcement acZons
may result in civil or criminal penalZes.
• Consequences: Significant fines have been imposed for OFAC violaZons.
• ReputaZonal damage to companies and individuals can be significant.
• Internal and external invesZgaZons of alleged violaZons can be very disrupZve to business.
184
* ITAR penalties are similar, but $500,000 maximum civil penalty. ªSomewhat different civil penalties in force for violations of Cuba and narcotics trafficking sanctions.
Privileged & ConfidenZal
OFAC Concerns Related to Conflict Mineral Disclosures: Sanc@oned Countries
• Companies should be alert for any import or dealing in products from the following OFAC-‐sancZoned countries, as these transacZons may be prohibited: Cuba, Iran, North Korea, Sudan and Syria.
• There are no de minimis or substanZal transformaZon provisions for sancZons on Cuba or N. Korea.
• Imports of Iranian and Sudanese products are allowed if they are incorporated into manufactured products or substanZally transformed in a third country.
• The following Syrian imports are prohibited: Imports involving the Syrian Government or blocked persons associated with the Government; the importaZon of petroleum or petroleum products of Syrian origin that are not incorporated into manufactured products or substanZally transformed in a third country by a non-‐U.S. person.
185
OFAC Concerns Related to Conflict Mineral Disclosures: the Specially Designated Na@onals List
• OFAC’s List of Specially Designated NaZonals (“SDN List”) names individuals, enZZes, and vessels with which trade is prohibited and whose assets (property and interests in property) are blocked.
– Companies should consider whether any enZZes on the SDN List are involved in their supply chain (smelters, refiners, recyclers, scrap processors, etc.).
• The SDN List features the following persons, including certain persons in countries with conflict minerals:
– EnZZes owned or controlled by governments of sancZoned countries
– Persons contribuZng to conflict in the DRC, CAR, S. Sudan and Cote d’Ivoire
– Terrorists and terrorist organizaZons – Designated internaZonal drug
traffickers, and those operaZng on behalf of or controlled by narcoZcs cartels
– Members of transnaZonal criminal organizaZons
– Proliferators of WMD – Specific vessels and aircra�
186
The Specially Designated Na@onals List (cont’d) • The 50% Rule: According to
OFAC Guidance, blocked persons “are considered to have an interest in all property and interests in property of an enZty in which [they] own, whether individually or in the aggregate, directly or indirectly, a 50% or greater interest.”
• Therefore, if a listed person has an interest in an enZty of at least 50%, that enZty is also blocked, even if the enZty itself is not a designated party.
• Screening: Before engaging in a transacZon, companies should screen their products against the SDN List, and should assess whether individuals or enZZes on the list may have a 50% or greater interest in another enZty that the company seeks to transact with.
• The SDN List can be searched online at: h�ps://sdnsearch.ofac.treas.gov/Default.aspx.
187
DRC Sanc@ons • On July 8, President Obama signed an ExecuZve Order (“EO”) amending the
DRC sancZons program under EO 13,413 of October 27, 2006, which imposed sancZons against persons furthering conflict in the DRC. The amendments significantly broaden the criteria that may be used to sancZon such persons. – If the new criteria are used to sancZon addiZonal parZes, companies will be
more likely to encounter trade controls issues during their conflict mineral due diligence process.
• The new EO prohibits “any United States person (including any foreign branch)” from conducZng business with an enZty/individual possessing property or an interest in property originaZng from sancZoned parZes.
• The new criteria include acts supporZng persons involved in acZviZes that threaten the peace, security or stability of the DRC through illicit trade in natural resources. – This provision appears to target the conflict minerals trade.
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South Sudan and CAR Sanc@ons • On April 3, 2014, President Obama issued ExecuZve Order 13,664, authorizing sancZons against parZes engaging in violence, human rights abuses or destabilizing acZviZes in South Sudan.
• On May 12, 2014, President Obama issued ExecuZve Order 13,667, imposing sancZons on five individuals involved in the CAR conflict and authorizing sancZons on other parZes who engage in acts that undermine the democraZc process or insZtuZons in CAR through illicit trade in CAR natural resources, human rights abuses, or other destabilizing acZviZes in CAR.
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Privileged & ConfidenZal
Other Poten@al Issues • Generally, companies should consider whether
informaZon gathered during the Dodd-‐Frank disclosure process may present other compliance or reputaZonal issues.
• For example, anZ-‐corrupZon laws such as the U.S. Foreign Corrupt PracZces Act (“FCPA”) may be implicated by a company’s supply chain discoveries, especially if a company’s business requires it to interact with government enZZes. Look for corrupZon “red flags.” – The FCPA’s an@-‐bribery provisions forbid the bribery of
government officials, payments made for purposes of influencing/inducing a government official to act/not act, and the securing of improper advantage or obtaining/retaining business.
– The FCPA’s accoun@ng provisions require the keeping of accurate “books and records,” adequate systems of accounZng controls, and compliance by all subsidiaries and affiliates.
– There is no excep@on for local customary payments or common business pracZces.
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Privileged & ConfidenZal
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Best Prac@ces • Create, implement and update trade controls and anZ-‐corrupZon compliance programs that are tailored to your company’s specific needs, industry, and geographical scope.
• Ensure that informaZon gathered during conflict mineral evaluaZons is promptly shared with compliance personnel for internal review.
• Conduct regular SDN List screening of potenZal transacZons, and also screen supply chain partners that are included in dra� Dodd-‐Frank reports.
• IdenZfy any supply chain partners located in countries of concern. Determine whether they have been involved in producZon in any way, and if so, when.
• Consult legal counsel well in advance of SEC conflict mineral filing deadlines.
THE ELECTRONIC INDUSTRY CITIZENSHIP COALITION welcomes you to
HP final assembly, China
Process Manufacturing What companies are doing to address
worker safety and on-‐going challenges
Panelists: • Indira Balkissoon – Vice President, AlterEcho and Program Manager of
Northwest Green Chemistry • Gregory Morose –Research Professor, College of Health Sciences, University of
Massachusetts Lowell and Research Manager, Toxics Use Reduction Institute; UMASS Lowell
• Marcel Jacobs – Marcel Jacobs, Director of Sustainability, Philips October 2, 2014 11:00 am -‐12:30 pm
1
HP final assembly, China
Process Manufacturing Hazard/Risk CommunicaZon to address worker safety and on-‐
going challenges
196
Indira Balkissoon Vice President, AlterEcho
and Program Director Northwest Green
Chemistry October 2, 2014
Hazard and Risk CommunicaZon • Part and parcel of product development process and considers – FuncZon – Cost effecZveness – Safety of use
• Product manager balances between hazard and risk for workers
• Hazard and risk for workers is a different evaluaZon than for consumer exposure
197
Hazard and Risk are Different
http://www.youtube.com/watch?v=_GwVTdsnN1E
198
OSHA’s Hazard CommunicaZon Standard
199
• Purpose is to ensure the knowledge of all hazards that exist in the workplace and all hazards associated with use or the presence of chemicals on a worksite is transmitted or provide to all.
OSHA Hazard CommunicaZon
200
• Performance Standard • This means that employees need to know and be able to idenZfy hazards in their workplace and about all hazardous chemical used and stored in their workplace.
Employee Required Knowledge
• All of the Hazards (physical, energy, radiation, etc.) • All of the Hazardous Chemicals (list of chemicals) • There is a written Hazard CommunicaZons Program and where to find it. • Appropriate level of HazCom Training is provided for ALL Employees. • How to find (M)SDSs for all chemicals in the workplace. • How to read, interpret and understand (M)SDSs and where to find health
information on the (M)SDS. • How to obtain proper labels for any chemicals placed into new
containers.
What every employee MUST KNOW about their workplace:
Hazard CommunicaZon
202
• Can create more fear rather than easing a workers mind.
• It doesn’t provide information to tell the producZon manager or worker the type of danger the worker is actually in.
• Hazard doesn’t care about: – Degree or how a worker is exposed or to what extent the chemical is absorbed by the body
Risk CommunicaZon
203
• The likelihood of harm: – How exposures occur? – Degree exposed? – PotenZal to elicit adverse effects?
• This information assists the producZon manager to make informed decisions on how to protect workers -‐ engineering controls and administraZve controls.
• Dose Makes the Poison
TCE Example • Trichloroethylene
– Pervasive • Widespread use as industrial solvent • Historical disposal pracZces • Persistence in groundwater.
– Exposure • Ingestion of drinking water • Dermal exposure/inhalaZon while bathing • InhalaZon of indoor air – Vapor Intrusion
204
TCE Air Standards
205
• Commercial/OccupaZonal Standards – USEPA: RfC = 2 ug/m3
– OSHA: PEL = 100 ppm = 537,000 ug/m3
– OSHA: 5 min max = 300 ppm = 1,611,000 ug/m3
– NIOSH: TWA(10hr) = 25 ppm = 134,250 ug/m3
– ACGIH: TLV (8hr) = 50 ppm = 268,500 ug/m3
– ACGIH: STEL = 100 ppm = 537,000 ug/m3
Assessing and CommunicaZng Risk • Requires a mulZdisciplinary team to idenZfy and monitor potenZal sources of emissions – including toxicologists, risk assessors, groundwater and vapor intrusion experts to assess and measure risk to support producZon manager decision-‐making.
• ProducZon manager make an informed decision on when and how to inform potenZally exposed workers – before or after sampling?
• If necessary the installaZon engineering and administraZve controls to manage work place exposures. 20
6
Elimination 12 Principals of Green Chemistry
• Prevention • Atom Economy • Less Hazardous Chemical
Syntheses • Designing Safer Chemicals • Safer Solvents and Auxiliaries • Design for Energy Efficiency • Use of Renewable Feedstocks • Reduce Derivatives • Catalysis
• Design for DegradaZon • Real-‐Zme Analysis for
Pollution Prevention • Inherently Safer Chemistry
for Accident Prevention
2
* Anastas, P. T. and Warner, J. C. Green Chemistry: Theory and Practice. Oxford University Press: New York, 1998, p. 30.
HP final assembly, China
Responsible Electronics Conference: Reducing Toxic Chemical Use Greg Morose Toxics Use Reduction Institute: Research Manager University of Massachusetts Lowell: Research Professor October 2, 2014
Toxic Chemical Use
Manufacturing Process
In-‐plant treatment recycling, inventory
Byproduct
Toxic Chemical
Product
Releases/Emissions
Toxic Chemical Use in Massachusetts (2012)
Manufacturing Process
895 million lbs.
Releases/Emissions
33 million lbs.
(TRI, National 3.6 billion lbs.)
In-‐plant treatment recycling, inventory
Byproduct
Toxic Chemical
Product
318 million lbs.
Occupational Deaths & Illnesses “American workers use tens of thousands of chemicals every day. While many of these chemicals are suspecte of being harmful, only a small number are regulated in the workplace. As a result, workers suffer more than 190,000 illnesses and 50,000 deaths annually related to chemical exposures.1 Workplace chemical exposures have been linked to cancers, and other lung, kidney, skin, heart, stomach, brain, nerve, and reproducZve diseases.”
d
https://www.osha.gov/dsg/safer_chemicals/
Solutions
Source reduction
Control mechanisms
Hierarchy of Hazard Controls
Control Mechanisms Don’t Always Work
Coa@ng Opera@on Fined $341K Tuesday, September 9, 2014
“Workers repeatedly inhaled, absorbed and even ingested toxic hexavalent chromium through a variety of coating tasks at an Oklahoma contractor, federal authorities are alleging.
The Occupational Safety and Health Administration has cited Pride Plating Inc. of Grove, OK, with 38 violations—including nine repeat violations—and fined the company $341,550.”
“At Pride Plating, workers were exposed to hexavalent chromium through spray painting and dip tank operations, and in the lunchroom and smoking areas.”
http://www.paintsquare.com/news/?fuseaction=view&id=11965&nl_versionid=231
Source Reduc@on Techniques
Elimination and Substitution achieved by:
1. Manufacturing Process Chemical Substitution 2. Product Redesign/Reformulation 3. Manufacturing System Change
7
1. Manufacturing Process Chemical Substitution
Replacing a toxic substance or raw material used in a manufacturing process with a less toxic substance.
Case Study: V.H. Blackinton and Co. A manufacturer of metal badges and medals substituted solvent
(trichloroethylene: TCE) parts cleaning with aqueous based cleaning.
Case Study: Crane and Company
A manufacturer of paper modified the process chemistry of its re-‐pulping operations by using liquid carbon dioxide instead of sulfuric acid.
2. Product Redesign/Reformulation Reformulating or redesigning end products to be non-‐toxic or less toxic
upon use, release or disposal.
Case Study: Hampden Papers A manufacturer of paper, aluminum foil, and plastic films reformulated various coatings used on their productsand eliminated the use of ethylene glycol monobutyl ether.
Case Study: Alpha Gary Corporation
A manufacturer of plastic compounds reformulated their products for the wire and cable industry to reduce their use of lead heat stabilizers.
3. Manufacturing System Change Developing and using manufacturing equipment/processes of a different
or more modern design than those currently used.
Case Study: Crest Foam A manufacturer of flexible foam installed a new foam blowing system which resulted in the elimination of methylene chloride.
Case Study: ChemGenes Corporation
A supplier of products related to DNA synthesis installed a new chromatography system that reduced their use of chloroform (55%) and
hexane (35%).
Alternatives Assessment A process for identifying, comparing and selecting safer alternatives to using chemicals of concern.
Environmental, Health, & Safety
Financial Technical
performance
Alternatives Assessment
12
EHS Financial/Economic Technical Performance
Is it safer? Is it affordable? Will it work?
• Flammability? • Human toxicity? • Animal toxicity? • Ozone depleZon? • Persistence? • BioacummulaZve? • Etc.
• Materials? • Regulatory compliance? • Insurance? • Training? • Equipment? • UZliZes/energy? • Etc.
• Equipment/process changes?
• Industry standards? • Material compaZbility? • Product quality? • Product longevity? • Customer specificaZons? • Etc.
Approaches and Tools Area Approach/Tool
Overall AA methodology • Interstate Chemicals Clearinghouse AA Guide • OSHA Steps for TransiZoning to Safer Chemicals: A Toolkit for Employers and Workers
• TURI: 5 Chemical AA methodology
Environmental, Health, and Safety EvaluaZon
MSDS, check restricted substances list, literature and database search, hazard evaluaZon (CPA – Green Screen, TURI – P2OASys)
Technical Performance EvaluaZon
Literature review, technical expert judgment, performance tesZng, designed experiments, pilot/prototype
Financial EvaluaZon Internal Rate of Return, Payback Period, Net Present Value
Industry Collaborative Alternatives Assessment Initiatives
New England Lead-free Electronics Consortium Collaborative performance testing for safer alternatives (lead-free & halogen-free).
2001 to 2010 http://www.turi.org/Our_Work/Business/Industry_Sectors/Electronics
Defense & Aerospace Consortium Collaborative performance testing for hex chrome free topcoat primers, sealants, and bond primers. Also, safer sealant removers. 2012 – ongoing http://www.turi.org/Our_Work/Business/Industry_Sectors/Aerospace_Defense
Massachusetts Results
Trichloroethylene (TCE) 1990 – 2012
3.65 million pounds to 350k pounds 90.4% reduction
Toxic Chemicals in Massachusetts
Reduc@on (1990 – 2005)
Used in manufacturing 40%
Shipped in products 41%
64 Thousand Dollar Question These
environmental benefits are nice, but how much are they going to cost
me?
Economic Benefits of Toxics Use ReducZon in Massachusetts Independent study conducted by Abt Associates Inc. for the period 1990 to 1997
Costs • TUR reporZng costs • TUR fees • TUR planning costs • TUR training costs • TUR capital investments
$76.6 million
Savings
Net savings in annual operaZng costs
$88.2 million
http://www.turi.org/TURI_Publications/TURI_Methods_Policy_Reports/Benefit-‐ Cost_Analysis_of_the_Massachusetts_Toxics_Use_Reduction_Act._1997
Academic Research Grants • TURI provides funding to University of Massachusetts faculty for research that will lead to new opportunities to reduce toxic chemical use.
• The program has provided over $1.5 million in funding, supporting more than 105 graduate and doctoral level students.
• Industry partners are strongly encouraged. Dr. Sammy Shina: Lead-‐free electronics
Dr. Zhiyong Gu: Lead-‐free nanowires, nanosolder, and nanosolderpaste http://www.turi.org/Our_Work/TURI_Grants/Academic_Research_Grants
Dr. Sanjeev Manohar: Green chemistry synthesis of polyaniline surface finishes
TURI’s Cleaning Laboratory • Surface cleaning
– Industrial parts – Floors and building surfaces
• Lab services – Laboratory Testing per ASTM, Mil-
Spec, etc. – Piloting in-lab or on-site – Follow up technical assistance
– Comprehensive solutions database Contact: Jason Marshall, [email protected]
www.cleanersolutions.org
Peer to Peer Collaboration
• A network of companies and other organizations working collaboratively to advance green chemistry across sectors and supply chains.
• 80+ members including Dell, Nike, Hewlett-‐Packard, 3M, Staples, Johnson & Johnson, Dupont, EMC, etc.
• Conferences, webinars, ongoing projects such as:
– Assessing how best to optimize B2B chemical information transactions that involve CBI concerns
– Working with retailers to promote safer chemicals, materials and products across retail supply chains.
http://www.greenchemistryandcommerce.org/
Toxics Use Reduction Institute
www.turi.org 600 Suffolk St
Wannalancit Mill Bldg, 5th floor Lowell, MA 01854
Greg Morose [email protected] 978-‐934-‐2954
Thank you for your time!
Sources of Information Toxics Use Reduction Case Studies: http://www.mass.gov/eea/grants-‐and-‐tech-‐assistance/education-‐and-‐ training/education-‐and-‐outreach/ota-‐publications/ota-‐case-‐studies/ Massachusetts Toxics Chemical Use Data (TURA Data): http://www.turi.org/Our_Work/Toxic_Chemicals/TURAData PolluZon Prevention Options Assessment System (P2OASys): http://www.turi.org/Our_Work/Cleaning_Laboratory/TURI_Cleaning_Labo ratory/Safety_Screening GreenScreen for Safer Chemicals: http://www.greenscreenchemicals.org/
HP final assembly, China
October 2nd, 2014_EICC Conference San Francisco, Philips Group Procurement 233
Process chemicals EICC event Burlingame
Marcel Jacobs Director Supplier Sustainability, Philips Group Procurement October 2nd, 2014
October 2nd, 2014_EICC Conference San Francisco, Philips Group Procurement 234
Increase in demand external stakeholders & Brand responsibility
www.greenpeace.org (2007)
October 2nd, 2014_EICC Conference San Francisco, Philips Group Procurement 235
Don’t know doesn’t mean it is not out there! EICC survey n = 10 responses
YES %
NO %
HAVE YOU ANALYZED YOUR SUPPLY CHAIN TO IDENTIFY WHERE BENZENE
AND HEXANE ARE BEING USED?
In [CATEGORY NAME], %
At [CATEGORY NAME],%
[CATEGORY NAME], %
[CATEGORY NAME], %
WHERE IS BENZENE AND HEXANE BEING USED?
October 2nd, 2014_EICC Conference San Francisco, Philips Group Procurement 236
Benzene eliminated from Philips’ own operaZons since 2012 Required a clear exit strategy and commitment of business & development & operaZons
• Process started 2006 to idenZfy usage of benzene and VOC’s at own operaZons
• Waiver process implemented – Controlled by COO and CTO – Focus on eliminaZon where no alternaZve available (e.g. wet paint specific colors)
– Usage strict controlled, monitored and safe and healthy environment safeguarded
– Health checks implemented on regular basis
• Substances eliminated from own operaZons include for example benzene
• New acquisiZons remain point of a�enZon
October 2nd, 2014_EICC Conference San Francisco, Philips Group Procurement 237
Philips’ approach to control hazardous-‐substances in our supply chain Will this be the EICC approach as well?
IdenZfy relevant Hazardous-‐Substances
IdenZfy applicable manufacturing processes
IdenZfy alternaZves / secure safe work environment
Update Audit protocol
Train Own & Third party audit
staff IdenZfy and
contact selected suppliers
Train suppliers where applicable
Implement waiver process
Verify safe use & health checks
Report progress
Part of annual process
e.g. Wet paint, PCB/Metal cleaning
Philips & EICC
Awareness & Recognize
Annual Report Internal KPI
QuesZonnaire site visits, follow-‐up
Secure RACI & management buy-‐in
E-‐learning & site visits
QuesZonnaire site visits, follow-‐up
Specialists & On-‐site checks
October 2nd, 2014_EICC Conference San Francisco, Philips Group Procurement 238
PragmaZc approach to avoid unnecessary complexity and paper work Think in applicaZons and relevant processes not in substance list
Example for illustra@on purposes only
Check Benzene
?
Degreasing Metal?
Coloring Metal? Colored Luminaires
Wet PainZng
Powder CoaZng
Check VOC’s ?
Applicable product group?
Check PPE/
training
October 2nd, 2014_EICC Conference San Francisco, Philips Group Procurement 239
What’s next Set-‐up a specific EICC task-‐force on process chemicals • Finalize list of app. 5-‐10 relevant substances (Philips and key stakeholders e.g. EICC)
• Define Zme lines (Deployment and roll-‐out)
• Assign owners (RACI)
• Role EICC e.g. act as Facilitator?
• Role NGO’s?
• Supply base coverage à supplier selecZon (e.g. risk, spend, relevant processes)
• Focus: manufacturing processes
October 2nd, 2014_EICC Conference San Francisco, Philips Group Procurement 240
Thank you
HP final assembly, China
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The world’s leading sustainability consultancy
GRI and Sustainability Reporting
Presented by James Margolis and Jennifer Eastes - ERM
The world’s leading sustainability consultancy
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Class Objectives
§ Become familiar with the GRI G4 guidelines
§ Discuss practical aspects of sustainability reporting
§ Share experiences and network with others
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244 The world’s leading sustainability consultancy
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Class Facilitators
ERM Philadelphia
Office: 1.484.913.0405 Mobile: 1.484.343.2946
ERM Denver
1.303.741.5050
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Overview of GRI and Reporting
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What is Sustainability Reporting?
An extended, time-consuming and expensive process of unnecessary data gathering and
storytelling intended to hide problems and convince people you are a responsible corporate citizen.
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247 The world’s leading sustainability consultancy
247 The world’s leading sustainability consultancy
What is Sustainability Reporting?
§ Systematic practice of disclosing sustainability vision, management practices and resulting performance
§ Addresses a company’s integrity, credibility, and transparency about issues beyond direct financial performance
§ Also known as corporate social responsibility, corporate citizenship, or ESG (environmental, social, governance) reporting
§ Largely a voluntary practice
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Global Reporting Growth
Source: Corporate Register Does not include reports published in non-Latin scripts
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Why report?
§ Meet what are increasingly basic expectations; including investors, customers, etc.
§ Control message
§ Improve reputation
§ Improve score with external raters and rankers
§ Reduce effort/cost for responding to inquiries
§ Build internal engagement
§ Refine strategy
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250 The world’s leading sustainability consultancy
250 The world’s leading sustainability consultancy
Who might read your sustainability report?
NGOs
Customers
Policymakers and Regulators
Employees and Future Talent
Shareholders
Investors and Analysts
Media
Communities
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251 The world’s leading sustainability consultancy
Overview of GRI
§ Multistakeholder global non-profit
§ Initially created in 1996, officially established 1999 with the support of United Nations Environment Program
§ GRI Mission: To make sustainability reporting standard practice by providing guidance and support to organizations
§ 4th generation launched in May 2013 (G4)
Globally accepted, voluntary standard for sustainability reporting
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252 The world’s leading sustainability consultancy
GRI G4
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GRI Guidelines … key elements
§ Principles on report content and quality
§ General standard disclosures
§ Disclosures on management approach
§ Performance indicators and protocols
§ In-Accordance Model
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254 The world’s leading sustainability consultancy
254 The world’s leading sustainability consultancy
GRI Principles
Principles for Defining Report Content
§ Materiality
§ Stakeholder inclusiveness
§ Sustainability context
§ Completeness
Principles for Ensuring Report Quality
§ Balance
§ Comparability
§ Accuracy
§ Timeliness
§ Clarity
§ Reliability
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General & Specific Standard Disclosures
General:
§ Strategy and analysis (1-2)
§ Organizational profile (3-16)
§ Material Aspects and Boundaries (17-23)
§ Stakeholder Engagement (24-27)
§ Report Profile (28-33)
§ Governance (34-55)
§ Ethics and Integrity (56-58)
Specific:
■ DMA
■ Economic (EC1-EC9)
■ Environmental (EN1-EN34)
■ Labor Practices and Decent Work (LA1-LA16)
■ Human Rights (HR1-HR12)
■ Society (SO1-SO11)
■ Product Responsibility (PR1-PR9)
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Core & Comprehensive Levels
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Core & Comprehensive Levels
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GRI Index
§ Specify which individual disclosures and indicators are subject to external assurance
§ Specify justification for any omissions
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Reporting Process and Identifying Material Sustainability Issues
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Why Conduct a Materiality Assessment?
§ Inform or validate sustainability strategy, programs and initiatives
§ Provide foundation for sustainability report
§ Engage with stakeholders
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What is a Material Issue?
§ GRI – “… topics and indicators that reflect the organization’s significant economic, environmental and social impacts, or that would substantively influence the assessments and decisions of stakeholders.”
§ AccountAbility – “…A material issue is an issue that will influence the decisions, actions and performance of an organisation or its stakeholders.”
§ International Accounting Standards Board – “Information is material if its omission or misstatement could influence the economic decision of users taken on the basis of the financial statements.”
§ SASB – “…in the event such fact is omitted from a particular disclosure, there is a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of the information made available.”
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Developing a Materiality Assessment
1. Review Business Strategy
2. Identify Stakeholders
3. Identify and Map Material Aspects
4. Prioritize Issues
5. Plot Results
6. Define Strategy and Next Steps
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Roundtable Discussion
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Reporting Challenges
§ Less trust than ever
§ Rising expectations, fewer resources
§ Show me and prove it
§ Defensive vs. offensive
§ One way vs. two way communication
§ Authenticity and transparency vs. risk management
§ Public relations vs. technical reporting
§ Multiple audiences
§ Integrated reporting vs. GRI reporting
§ Changing media landscape (paper, web, broadcast, social media)
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Contact Information James Margolis Phone: 484.913.0405 Email: [email protected]
Jennifer Eastes Phone: 303.741.5050 Email: [email protected]
HP final assembly, China