HP 2015 Sustainability Report

Introduction

Environment

Society

Integrity

About this report

Preventing forced labor in Malaysia Manufacturers in Malaysia rely heavily on foreign migrant workers to meet production labor needs. Many workers find employment at suppliers through labor agents, who have historically charged excessive fees—often through payroll deductions—that create risks for bonded labor in our supply chain. In April 2015, Hewlett-Packard Company hosted three Foreign Migrant Worker management training sessions for suppliers in Malaysia together with Intel, Seagate, Western Digital, and the Malaysian Ministry of Home Affairs. The workshops in Johor, Kuala Lumpur, and Penang provided training on IT companies’ brand requirements and best practices on labor stan- dards and foreign migrant worker management for 90 suppliers, 38 labor agents, and sev- eral hostel management companies.These training sessions are part of the implementation phase of our Foreign Migrant Worker Standard. We want to ensure that our suppliers not only understand our expectations but increase their capacity to meet them. Improving supplier performance As HP moves into new markets, we on-board new suppliers, ensuring that they under- stand and meet prescribed performance levels prior to doing business. Hewlett-Packard Company assessed 19 new suppliers in 2015, integrating SER standards and working with them to continually improve performance from the start of the business relationship. Our extensive engagement with suppliers continues via audits, targeted assessments, and monthly KPI tracking. Results from these engagements allow our program to iden- tify and prioritize existing and emerging issues in the supply chain. HP then addresses risk and drives supplier improvement through targeted capability building, remediation, and industry collaboration. We evaluate how well our suppliers perform on social and environmental metrics using the SER scorecard. Higher supplier engagement leads to stronger social and environmental performance. Previous audit data shows that the longer suppliers participate in an auditing program, the better they perform (see graph). Likewise, suppliers with high levels of involvement—such as participation in capability-building programs—tend to have stronger SER performance. SER scorecard The HP SER scorecard measures supplier performance on a range of SER factors that includes audit scores, product and material compliance, environmental management, mineral sourcing, and labor management. In 2015, the SER scorecard was expanded to cover all strategic commodity groups in addition to of the previously encompassed final assembly and key commodity suppliers. The company also refined the scorecard criteria to clearly communicate elevated expectations and to drive further improvement as suppliers’ capabilities develop.

Supplier SER audit performance trend relative to years in program for audits conducted 2014–2015

Excellent Audit score

Poor

Number of years in SER audit program 5 4 3 2 0 1

Average audit score Lowest audit score observed 15 % increase in average audit score for suppliers completing at least one HP capability-building program * * Increase is compared to suppliers not completing any HP capability-building programs. Data covers average audit scores (initial and full re-audits) of production suppliers, 2013–2015.

78 HP 2015 Sustainability Report

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