CA Transparency in Supply Chains Act of 2010

On January 1, 2012, the California Transparency in Supply Chains Act of 2010 (SB 657) went into effect. This new law seeks to increase the quantity of information made available by manufacturers and retailers regarding their efforts, if any, to address the issues of slavery and human trafficking. This in turn allows consumers to make better, more informed choices regarding the products they buy and the companies they choose to support. HP's Electronic Industry Citizenship Coalition (EICC) Code of Conduct includes provisions that address international labor and human rights standards. HP believes that workers at supplier facilities have: (i) the right to freely choose employment; (ii) the right, in accordance with local laws, to associate freely, join or be represented by worker councils, join labor unions on a voluntary basis, and bargain collectively as they choose; and (iii) the right to a workplace free of harassment and unlawful discrimination. HP's HP's Global Human Rights Policy further outlines HP's commitment to and respect for human rights.

Slavery and human trafficking can take many forms, including forced labor and child labor. A commonly used interpretation can be found in the Trafficking Victims Protection Act (TVPA). Since HP began its supply chain social and environmental responsibility (SER) program in 2000, HP has undertaken efforts to ensure and verify there is no bonded, child, forced, indentured, or involuntary prison labor in HP's supply chain. These efforts include:

  1. Evaluation and verification of product supply chains. HP evaluates the risk of slavery and human trafficking in its supply chain through risk-based supplier assessments and supply chain due diligence.

    • Risk-based supplier assessments. HP performs assessments of potential suppliers according to HP's risk-based approach. This approach includes preliminary risk assessments and supplier assessment questionnaires.
    • Due diligence. HP's Supplier Scorecard is one method HP uses for measurement and tracking. The Scorecard is used to periodically assess supplier performance throughout the year and covers performance on issues such as regular business requirements—including compliance, legislation, and product quality—and social, ethical, and environmental considerations. (See Procurement integration)

    HP also verifies the absence of slavery and human trafficking in its supply chain through the use of HP audits, collaborative audits, and third-party audits as described in Part 2, "Audits of suppliers," below.

  2. Audits of suppliers. HP's audit program (see Supplier management system) evaluates and verifies suppliers' compliance with HP's EICC Code, which, among other things, prohibits both forced and child labor. With few exceptions, audit verification is substantiated by at least three different, independent sources of evidence, including documents, records, management interviews, worker interviews, and physical observations. Various types of announced audits are conducted under this program, including on-site audits attended by HP, collaborative audits, and third-party on-site audits of supplier practices and underlying management systems. A finding of nonconformance with HP's EICC Code relating to the issue of forced or child labor does not necessarily indicate that forced or child labor has occurred, but could indicate a lack of systemic processes or procedures to prevent it. Following an audit and finding of nonconformance, suppliers are required to produce corrective action plans to outline how they intend to resolve the issues of nonconformance, which HP then reviews and approves. HP has a zero-tolerance policy for the presence of forced and child labor. If any zero-tolerance items are uncovered in audits, HP requires suppliers to implement corrective action within 30 days. HP then returns to the facility between 30 and 90 days after the initial audit to confirm that the supplier has implemented corrective action, as well as implemented processes to prevent a recurrence. More than 80% of HP's suppliers audited in 2010 and 2011 confirmed that HP's EICC Code requirements were communicated to their next tier suppliers. Approximately 55% of HP's suppliers also demonstrated that they had implemented an effective process to ensure that their respective next tier suppliers implement HP's EICC Code.

  3. Certification requirements for direct suppliers. HP has purchasing agreements or purchase order terms and conditions in place with our direct suppliers and Original Design Manufacturers (ODMs), requiring each to comply with international standards and applicable laws and regulations regarding forced and child labor as specified in HP's EICC Code. HP's direct suppliers and ODMs certify that their operations comply with the laws regarding slavery and human trafficking through their assent to the terms and conditions regarding the same in these HP agreements. Although the terms of the EICC Code do not specifically address "materials" that suppliers incorporate into products, HP presents this code of conduct as a total supply chain initiative and requires suppliers and ODMs to certify, at minimum, that they require their next tier suppliers to comply with the EICC Code, including compliance with laws regarding slavery and human trafficking.

  4. Internal accountability standards and procedures. HP requires all of its employees and contractors to comply with HP's Standards of Business Conduct (SBC), which includes provisions aimed to ensure that bonded, child, forced, indentured, or involuntary prison labor are not permitted or enabled by any HP business partner or within supplier operations. HP's SBC is enforced through the HP Global Misconduct Policy, and we train employees on these standards annually. HP's SBC has also been adapted for contingent workers in the HP Contingent Worker Code of Conduct, which is re-enforced through labor contracts. In addition, HP trains employees responsible for supply chain management on how to identify and respond to supply chain issues, such as forced labor or child labor.

  5. Employee training. HP trains employees responsible for supply chain management on how to identify and respond to supply chain issues, such as forced labor or child labor through HP's procurement training program. The program explains the definition, purpose, and enforcement of HP standards against forced and child labor as well as how to mitigate the risks within the supply chains of products. HP also partners with a number of nongovernmental organizations (NGOs) and training partners to raise awareness of and conformance to HP's EICC Code through various programs. Among other things, these programs look to improve supplier capabilities to comply with HP's EICC Code and reduce the risk of nonconformance. HP's capability building programs have included worker-management communications training, which provides employees access to mechanisms to raise any issues with management or superiors. Since 2008, HP has partnered with labor NGOs to provide EICC Code training, as well as an independent direct hotline for workers in China, to increase workers' knowledge of labor rights. In 2011, HP partnered with Business for Social Responsibility (BSR) in Malaysia to provide training on appropriate guidelines for employing migrant workers. This training included HP's key suppliers in Malaysia and their respective sub-tier suppliers. (See Capability building for more information.)

In addition to our efforts described above, minerals mining in Democratic Republic of Congo conflict zones is another area of concern for the industry. HP is working with industry partners to address these issues and is involved in the development of an industrywide solution to support conflict minerals due diligence. (See Conflict minerals for more information.)

As an EICC member, HP has benefitted from the Freely Chosen Employment (FCE) task force, which helps identify opportunities to share best practices among EICC members, expand the EICC Code, and make recommendations on tools and training available to help build capabilities among suppliers. Other collaborative alliances with the Global e-Sustainability Initiative (GeSI), Social Accountability International (SAI), and the Global Social Compliance Program (GSCP) allow HP to exchange information on issues and best practices.

For full details of our supply chain SER program and specific audit findings, see Supply chain responsibility.