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General Electric outlines its expectations of supplier performance within its "Integrity Program" and conducts onsite audits for all suppliers to identify points for improving environmental and energy performance. To help suppliers meet the Integrity Program requirements, it provides capacity building in its suppliers' factories, delivers local training programs and hosts supplier summits. GE also encourages suppliers to underake "Treasure Hunts" within their factories.
|Activity types||Capacity building and implementation support, Audits|
|Organisation leading the initiative||General Electric|
|Region from which the initiative is led|
EHS (Environment, Health and Safety) Academy - China
|Supply chain sectors targeted||
Aluminium, Cement, Chemicals and chemical products, Equipment and machinery, Glass, Iron and steel, Non-ferrous metals, Non-metallic minerals, Paper pulp and printing, Textile and leather, Petrochemicals, Plastics
Cross sectoral. GE divisions range from aviation, household appliances, oil and gas extraction, healthcare, rail infrastructure and energy technology. Suppliers encompass sectors such as steel, aluminium, minerals, chemicals and electronics.
|Program or partnership linkages||
WBCSD Sustainable Consumption and Value Chain, Institute for Sustainable Communities
General Electric (GE) has been involved in multiple partnerships to build capacity in Chinese factories to achieve carbon reductions in industrial facilities.
GE worked with peer companies, including Walmart, Adidas, Honeywell, Citibank and SABIC Innovative Plastics to fund the establishment of an Environmental, Health & Safety (EHS) Academy in China’s Guangdong province. GE also partnered with the Institute for Sustainable Communities (a nonprofit organisation focused on community-based solutions), the Guangdong Academy and the World Business Council for Sustainable Development (WBCSD) to deliver supplier training in China on how to achieve energy and greenhouse gas reductions.
In addition, over the last three years, GE and the GE Foundation have been supporting the work of the World Resources Insitute (WRI), ISC and WBCSD to adapt the WRI/WBCSD GHG Protocol for China [*1].
GE also shares its own experiences of its in-house Energy Treasure Hunts with suppliers, including its strategies for how it reduced GHG emissions.
|Policy linkages||'Clean Industries' program administered by Mexico's environmental agency.|
A key driver for General Electric is supporting the company's brand and reputation - social and environmental best practice is a key focus. Ensuring proactive and effective engagement with suppliers on their sustainability and environmental performance is highly relevant to GE.
Suppliers are driven to engage by the buying power of GE, noting that poor performance in GE's regular on-site assessment/audit (every 1-3 years) can result in the termination of supply contracts with GE.
GE has been a partner in the Guangdong EHS Academy since 2007.
|Description of the scheme||
GE conducts on-site audits, piloted the implemention of Environmental Management Systems (EMS), and provides a range of capacity building and implemenation support mechanisms to help suppliers meet GE's expecation's as laid out in its Intregrity Program.
GE's expectations are laid out as part of its Integrity Program. The Integrity Program is an umbrella term for the embedding of integrity in a range of business operating policies covering issues from procurement to recruitment, and is given form by GE's integrity policy, known as the Spirit and the Letter. [*3] The Program requires that suppliers participate in GE's on-site audits.
GE conducts and funds on-site inspections of the majority of its suppliers, mostly in the developing world (30% of GE's suppliers are located in China alone), prior to placing orders and periodically thereafter. Third-party firms conduct some inspections but GE's own personnel conduct the bulk of them. Over the period 2008–2011, assessments were conducted in 67 countries. In 2011 GE began asking suppliers subject to on-site audits whether they are tracking their energy usage and whether they have energy reduction goals. GE auditors provide individual coaching to suppliers at the end of an audit on how to save energy.
In 2010, GE conducted more than 2,800 such audits worldwide, and identified more than 12,500 'findings' or points of concern in supplier factories. GE requires suppliers to address all findings within a reasonable period and tracks closure in an automated database. Of the more than 12,500 findings identified in 2010, 85% were closed as of February 15, 2011. GE will track remaining findings to closure. While the Company’s experience is that most suppliers seek to meet GE’s expectations, GE terminated approximately 150 suppliers in 2010 for poor sustainability performance (social or environmental) in this program.
Piloting of Environmental Management Systems
From 2009 - 2011, General Electric piloted an approach to embed environmental management systems (EMS) in suppliers' operations. However, despite a "significant coaching and follow-up effort", many developing country suppliers were unable to meet GE's expectations. At a 2010 Supplier Summit in Shanghai, many participating suppliers spoke of "audit fatigue" and the overall limitations of auditing. As a result of this feedback, as well as other previous experiences, GE therefore decided to adopt a different approach, focusing on improving suppliers' processes, sharing best practice and supporting suppliers to locate resources and tools to help them meet GE's expectations laid out in the Integrity Program.
Capacity building and Implementation Support
A range of capacity building and implementation support mechansims are provided to GE's suppliers to help them meet the expectations laid out in the Integrity Program and to perform well in on-site audits.
Parnerhship with Mexico's environment agency 'Clean Industries' program
In Mexico in 2007, GE signed an agreement with Mexico’s environmental enforcement agency to encourage GE suppliers in Mexico to participate in the agency’s voluntary 'Clean Industries' (CI) program and use GE’s supplier review process as part of the CI audit. The program involves the formalisation of internal environmental audits on a quarterly basis. These audits identify opportunities to save energy and apply environmental best practice. One Mexican supplier that participated in the program was Celulosa y Corrugados de Sonora, S.A. de C.V., a manufacturer of liner paper and cardboard boxes.From 2004 to 2008 the company realised a 49% reduction in CO2 emissions per ton of cardboard and paper reduced, by implementing measures such as increasing the efficiency of boilers in the factory.
|Requirements on or activities undertaken by the target group||
Compliance with the supplier audits is mandatory under GE’s ''Integrity program'' and is a precondition to receiving an order from GE.
On-site audits are conducted by GE itself through certified auditors, although some are conducted by external parties.
|Tools and resources (includes use of external platforms for capturing suppliers' data)||
A range of tools and resources are provided to help suppliers meet the expectaions laid out in GE's Integrity Program. These are further outlined in the "Description" above and include:
Impacts, Costs & Benefits
Information not available
Examples of individual supplier results include:
While the GE' experience is that most suppliers seek to meet its expectations, it has terminated approximately 150 suppliers in 2010 for poor performance in its Integrity Program.
Reduction of reputational and legal risk to GE as a result of environmentally irresponsibly suppliers: While the Company’s experience is that most suppliers seek to meet its expectations, GE has terminated approximately 150 suppliers in 2010 for poor performance in its Integrity Program.
Footnotes & References
WRI/WBCSD GHG Protocol is the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions. It provides the accounting framework for nearly every GHG standard and program in the world - from the International Standards Organization to The Climate Registry - as well as hundreds of GHG inventories prepared by individual companies. For more information, visit the GHG Protocol website: http://www.ghgprotocol.org/[*2][*3]
GE Integrity Program "The Spirit and The Letter' guidance document: http://files.gecompany.com/gecom/citizenship/pdfs/TheSpirit&TheLetter.pdf