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Corporate Citizen, Hewlett-Packard

The Green Supply Chain

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At HP green thinking has become a guiding principle, not only in R&D, design and marketing, but also in its relations with contract manufacturers.

The Green Supply Chain

By Jerry Lai
From CommonWealth Magazine (vol. 393 )

Lugging computers and holding printers, customers are standing in line at the Hewlett-Packard (HP) customer service center in a basement opposite the skyscraper Taipei 101, in Taipei's posh Xinyi District.

A number of empty boxes stand around. 'Our packaging is anything but fancy,' says Jonathan Yang, managing director of HP Taiwan, in pointing out environmental changes in product packaging. Products are wrapped in plastic bags and then put into boxes that have hardly anything printed on them. 'We don't even print hard copies of user manuals anymore,' Yang adds.

All these seemingly simple changes have nonetheless been carefully designed in order to protect the environment through products that are non-toxic, easily recyclable, light and handy, but also able to be shipped worldwide. As a result, product design at U.S. electronics firm HP today differs a lot from in the past. 'We have already made the transition from design for manufacture to design for the environment,' Yang explains.

While environmental issues are a pressing concern worldwide, at HP they have already permeated thinking in R&D, design, logistics and marketing at the company's locations around the globe.

This year HP for the first time participated in the CommonWealth Magazine's Corporate Citizens ranking and immediately made it into the Top 10 among foreign enterprises.

Moreover, HP has been the only information technology company to make the World Economic Forum's Top 100 Sustainable Companies every year since the ranking's inception in 2005. HP CEO Mark Hurd even demands that the top executives of local HP subsidiaries create opportunities for dialogue with customers, suppliers and consumers on the company's environmental and social responsibilities. This shows how important social responsibility has become for today's enterprises.

On top of design innovation, the ability to communicate its goals is another important reason why HP was able to reach such a high ranking on corporate social responsibility this year. HP particularly sticks out for its ability to communicate with the manufacturers in its supply chain, to set standards and to forge consensus. 'Corporate social responsibility requires execution,' says Yang, adding, 'Execution relies on (corporate) culture.'

Setting Standards for Contract Manufacturers

Before taking his post at HP Taiwan, Yang worked at Taiwan's Hon Hai Group, one of HP's contract manufacturers. Back then HP conducted random checks on Hon Hai's environment, safety and hygiene compliance. During each spot inspection HP personnel spent two or three days looking into every tiny detail ranging from exhaust and noise emissions to restroom facilities and employees' familiarity with safety regulations, leaving no stone unturned.

Kai Hsiao, director for global procurement services for Asia at HP, explains that the company does not play the role of supervisor, but rather acts as a cooperation partner doing its best to help its suppliers improve. HP strives to make its contract manufacturers understand why it makes certain demands so that HP's standards become part of their own corporate culture, Hsiao elaborates.

From Target of Criticism to Model Enterprise

Just as international brands exert pressure on their contract manufacturers to face their social responsibility, HP has felt the heat that non-governmental organizations around the globe put on multinational enterprises with regard to working conditions and environmental concerns.

In early 2005 the Hong Kong-based Students and Scholars Against Corporate Misbehavior (SACOM) fiercely criticized multinationals for turning a blind eye to labor rights violations at their business partners in China and other low-cost countries. The group also launched a 'say No to sweatshop computers' campaign.

Initially some of HP's downstream suppliers were also on the blacklist, so Hsiao put together a team that toured the factories to look into the problems. Thanks to the team's tireless efforts to improve labor rights, SACOM last year recommended HP products when the University of Hong Kong invited bids for new computers. This win-win situation shows that 'NGO activities can also work as an incentive,' Hsiao says with a smile.

But large international brands still face the problem that their contract manufacturers again source their supplies from a wide array of smaller companies. Consequently, Hsiao went on the offensive and invited the top executives of HP's 50 top contract manufacturers, which account for some 80 percent of total orders, to a training program on corporate social and environmental responsibility. Hsiao believes that only if suppliers are aware of the importance of environmental protection will the final products be able to live up to the enterprise's environmental responsibility. He still regularly meets with these executives once a month to compare notes on how to realize corporate social responsibility and deeply implant it in corporate culture.

In order to establish an industry standard as soon as possible, given the complex relationship between brand makers and their contract manufacturers, HP in 2004 made public its internal 'Supplier Code of Conduct.' Meanwhile, so many large manufacturers have signed on that it has become the Electronic Industry Code of Conduct, or EICC, observed by the entire information technology industry.

'One day social responsibility will become a part of product standards, just like an invisible norm,' Yang believes. To continue as a standard leader, HP must keep moving forward, at an even faster pace.

Translated from the Chinese by Susanne Ganz


Chinese Version: 惠普 供應鏈上的綠色行動

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