Concerns about HP's supply chain social and environmental responsibility (SER) performance can come from many sources. We take input from each of these sources seriously—including our own monitoring program, independent assessments of comparative information technology (IT) industry factory sites such as the recent Fair Labor Association (FLA) report, civil society, and academic organizations, as well as our own suppliers and customers—and work directly with third-party organizations and our suppliers to remedy those issues and develop specific programs to educate and increase awareness of key issues affecting workers worldwide. Looking forward, we will focus our policy and program development on the most critical issues, including the following:

Working hours

HP is making a concerted effort to reduce instances of excessive working hours in our suppliers' facilities, because this is one of the most common issues found in our audits, especially in Asia Pacific and China. Since 2009, we have required supplier sites in China with major nonconformances related to working hours to report monthly key performance indicators (KPIs) that track the amount of overtime and the number of days off each worker has per week. The data is analyzed and shared with our procurement managers, who then discuss the working hours performance with our suppliers. For 65% of those suppliers, the average work week is less than 60 hours including overtime. Additionally, the number of people working less than 60 hours per week has increased 10% over the past 2 years. Given the positive results we have seen at sites invested in the KPI measurement methodology, HP plans to broaden this program to increase the frequency of reporting and the range of suppliers participating.

Forced and child labor

HP classifies the evidence of forced and/or child labor as a zero-tolerance item. Since we began our SER program in 2000, we have undertaken efforts to ensure and verify the absence of bonded, child, forced, indentured, or involuntary prison labor in our supply chain. HP had no zero-tolerance nonconformances in 2011 related to forced or child labor.

Migrant labor

Concerns about emerging issues in the IT industry, such as migrant labor, have highlighted the need to increase work with lower-tier suppliers to improve SER performance. Collaboration across the IT industry and with other industries helps us achieve this objective. Specifically, HP has delivered best-practices guidelines for the management of migrant workers to senior managers of suppliers and sub-tier suppliers in Malaysia and Singapore (countries with a high use of migrant labor), and we are expanding the program in 2012 to include additional suppliers.

Student workers

Nongovernmental organizations have raised concerns about suppliers in China recruiting labor from vocational schools under the pretense of internships to learn technical skills. In addition to our work to improve understanding of HP's Electronic Industry Citizenship Coalition (EICC) Code of Conduct, we have implemented predeparture training for suppliers and schools to further promote awareness and help mitigate the issue. This program teaches facility and school trainers how to prepare interns for work life, including learning about labor rights, occupational health, and how to adapt to city life, and it has so far reached more than 23,000 graduates and interns. HP will expand this program and implement additional measures to ensure the appropriate internship management at supplier facilities, including:

• Development and releasing specific student worker guidelines to ensure internships are voluntary, safe and fair;
• Conducting supplier training events regarding proper internship management along with partners from notable NGOs, academic institutions and local governments; and
• Inviting third-party review of HP's auditing protocols for child labor avoidance, with a focus on those procedures designed to screen student labor for minimum working age compliance.

HP believes that IT industry internships provide a positive experience for student populations when appropriately managed to be compliant with applicable laws and international best practices. We take this responsibility very seriously and will continue to enforce these expectations in our supply chain.

Freedom of association and collective bargaining

HP supports the rights of workers at our supplier facilities to associate freely on a voluntary basis, seek representation, join or be represented by works councils, join or not join labor unions, and bargain collectively as they choose as established by local law. To raise awareness around freedom of association, HP introduced our worker-management communications training in 2008, which continues to help workers better understand their labor rights and how they can raise grievances about their working environment. HP's engagement in the Dutch Sustainable Trade Initiative will further help supplier factory managers recognize the voice of workers in improving their own working conditions.

Employee welfare

HP takes seriously the issue of workers' health and welfare, which is the focus of several of our supplier improvement programs. Through various initiatives over the past 5 years, we have helped workers better understand their labor rights, provided independent workers' grievance hotlines for communicating concerns about their working environment, and raised awareness about health issues, discrimination, and gender equality.

Third-party validation

Since the beginning of our SER program, HP has sought to validate our program management system, audit methodology, and supplier development through partnerships with independent third-party organizations and dialogue with relevant stakeholders. Our goal has always been to increase transparency in our SER process and drive continual improvement and sustained performance from our suppliers.

HP is a long-standing member of the EICC and supports its common code of conduct and the validated audit methodology it developed for the electronics industry. In addition, HP believes that investing in robust, mature management system development and implementation is the key to achieving sustained levels of performance in our supply chain. As a long-standing member of Social Accountability International (SAI), HP shares SAI's mission to improve supply chain working conditions in accordance with performance criteria based on relevant International Labour Organization conventions and national law, and using management systems and multi-stakeholder dialogue. In 2012, HP will accelerate our commitment to a management systems approach to improving supply chain SER performance by allowing SAI unprecedented access to conduct deep, independent evaluations of both HP and a cross-section of HP's top suppliers against SAI management systems benchmarks. HP has committed to review, analyze, and discuss with SAI their findings, evaluations, and proposed improvement plans. In addition, HP has committed to publishing summary results of SAI's analysis and SAI's discussions with HP regarding that analysis.

HP is committed to remaining a leader in improving supply chain SER performance and to being at the forefront of addressing the key issues facing our supply chain partners to improve working conditions, standards, and performance worldwide.