Ground breaking stuff in HPs latest CSR report released last week - HP becomes the first in its sector to publish details of the major players in its supply chain. Now it seems the tech sector will follow the apparel industry on supplier transparency. The apparel industry tried to resist this for some time on the grounds that opacity of the supply chain was a key competitive advantage. In the end, the need to assure consumers and other stakeholders trumped and now we see similar dynamics at play in the hardware sector. Nothing builds trust like transparency.
I suspect HP and the rest of the industry will come under further pressure to increase the scope of disclosure now this initial threshold has been crossed. HP is publishing a list of around 25% of their suppliers which make up 95% of procurement spend. It’s not clear if this is where the sustainability risk really lies since more than 75% of the suppliers are still not declared and volume of procurement dollars placed is not necessarily commensurate with risk coverage.
The GAP was reminded recently how significant brand risk can hide further down the chain with the use of authorized and, indeed, unauthorized sub contractors by suppliers. The ethical problems associated with the cassiterite trade, for example, do not feature in the HP report eventhough the rising price of this commodity and political instability in production regions poses ethical sourcing risk for the entire sector. And yet auditing the operations of manufacturing suppliers is problematic enough at the first level of supply before even thinking about going all the way back, literally, to the mine face. HP reports on the difficulty of building a risk profile for first line suppliers with multi site operations for example.
It’s difficult to tell just how much control companies really have over what goes on far down the chain and harder still to assure due diligence. HP has run an impressive audit programme since 2004 to assure supplier performance against the Electronic Industry Code of Conduct and has an unedited external assurance statement to back it up. Still, up to 50% of HP suppliers audited are out of compliance with rules on working hours, emergency preparedness and hazardous substances.
Its a tough old world out there on the global supply lines and even HP can't wave a magic wand and banish injustice nor can they, or anyone else, vouch certain for 100% of their footprint. The main objectives of ethical supply chain management must be demonstration of due diligence & collaboration so to maximise public assurance and protect brand value. HP has moved well ahead of the competition on this score, now it’s up to consumers, including the B to B trade, to reward them for it and for peers and competitors to follow suit.
One addendum, it’s sad to see the HP's Asia Pacific CSR blog close up shop. Rita Sully was circumspect:
Blogging was a great way to move beyond the conventional PR statements and media releases. It’s a way to expose the challenges and the ethical dilemmas people inside corporations are faced with when balancing company business goals and sustainability.
The blog did not quite turn out the way it was originally planned, which was to have far more contributions from my colleagues from around the region, as well as be a platform for ‘a conversation about CSR’. I learned that like me, many others were also anxious about sharing their experiences and views in such a public forum on a company hosted site!
This is rather a shame given HPs pioneering efforts overall on transparency. Corporate CSR programmes increasingly need web 2.0 engagement for the reasons and benefits Rita outlines. Surely not a return then to the dreaded 'conventional PR statements' and 'media releases' as the future for sustainability communications?