Supplier Sustainability Declaration

Philips focuses on motivating and supporting suppliers’ continuous efforts to improve their sustainability performance. The Philips Supplier Sustainability Declaration and Regulated Substances List clarify what we expect from suppliers. We use supplier audits to verify conformance with the Supplier Sustainability Declaration and to establish whether the supplier has systems in place to facilitate continued conformance. Audits also enable Philips to identify issues and build corrective action plans with suppliers to address them. Our capability building programs train suppliers in areas of concern revealed in audits.

One of the actions we took to promote a sustainable future was to become a member of the Electronics Industry Citizenship Coalition in 2006.  The EICC provides the electronics industry with a platform from which to develop standardized tools and processes, helping to develop a uniform standard as well as to measure performance against this standard. Using this platform as a basis, Philips has created the Supplier Sustainability Program, defining what we expect of our Suppliers.

Create commitment: what we expect from suppliers
As a baseline for building a sustainable business relationship with our supplier, we require all our suppliers to conform to the Philips Supplier Sustainability Declaration and Regulated Substances List. This requirement forms an integral part of any commercial agreement between Philips and the supplier.

The Supplier Sustainability Declaration is based on the Electronics Industry Citizenship Coalition (EICC) code of conduct, supplemented with stricter requirements on collective bargaining and freedom of association, in line with the Philips General Business Principles. The Supplier Sustainability Declaration includes standards in the areas of Labor and Human Rights, Health and Safety, Environmental Impact, Ethics and Management Systems. The chapter on Labor and Human Rights specifies everything from the prohibition of child labor, forced labor and bonded labor to maximum working hours per week and safe working conditions. The prohibition of child labor and the use of forced and bonded labor includes forms of labor using indentured labor, involuntary prison labor, slavery or trafficking of persons.

Suppliers must also comply with our regulated substances list, which contains, among other things, Philips’ global product content requirements. This includes restricting or prohibiting hazardous substances in products or manufacturing processes. For more information on regulated substances, click here.

Build understanding: training & capacity building
Supplier awareness and engagement are critical for building a sustainable industry. Our training sessions, supplier day events and briefings aim to build knowledge and commitment among our suppliers. We encourage our suppliers to analyze gaps and areas for improvement by completing the EICC Self Assessment Questionnaire for each site that manufactures products for Philips.

Monitor identified risk suppliers
Philips conducts onsite sustainability audits with identified risk suppliers. The goal of the audit is to verify that a supplier works in accordance with the provisions in the Philips Supplier Sustainability Declaration, and if needed identify areas and ways for improvement. The audits are conducted by an external audit firm, carried out using the Philips Supplier Sustainability Audit Tool and cover the entire site, not just the production lines set up exclusively for Philips products.

Philips has direct relations with approximately 10,000 product and component suppliers and 30,000 service providers. Given the size and complexity of our supply chain we need to focus our efforts and develop an approach based on the supplier’s sustainability risk profile, related to spending, country of production, business risk and type of supplier relationship. All risk suppliers are by definition part of our audit program.

Manage risk
If non-conformances are identified during an audit, Philips expects the supplier to take the initiative to resolve the issues involved. Philips will work with the supplier to define a corrective action plan, specifying the required steps, milestones and responsibilities.

Philips sustainability experts are available to support the supplier development by training, sharing best practices, defining corrective action plans, and monitoring their implementation. Adequate implementation of corrective actions is verified during resolving audits.

Child labor policy
We also specify our expectations of suppliers in incidents of child labor. Under our child labor policy suppliers are expected to follow the three H’s approach as set out in the ILO guide for employers on child labor:

• putting a stop to underage Hiring
• removing children from tasks where the risks from Hazards are high
• reducing Hours to the legal level
  

Work with stakeholders
Engaging with relevant stakeholders, including industry organizations, civil society organizations and governments, helps us to further improve our programs.

A consistent message from multiple customers to suppliers is needed to leverage impact. Alignment can come from collaboration within the industry, which is why Philips joined the Electronics Industry Citizenship Coalition (EICC) in 2006.

Sustainable Trade Initiative IDH
Philips is one of the initiators of the IDH Electronics Program, an innovative multi-stakeholder initiative sponsored by the Sustainable Trade Initiative (IDH) together with Dell, HP, Philips and civil society organizations. The program will work with over 100 electronics suppliers in China to support innovative workforce management practices, sustainability and better business performance. The goal is to improve the working conditions of more than 500,000 employees in the electronics sector.

Please read the annual report and see the Supplier Sustainability Involvement Program for more details.