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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.

SCI Information

Activity types Capacity building and implementation support, Audits
Organisation leading the initiative General Electric
Region from which the initiative is led
Supplier's location China, Global

EHS (Environment, Health and Safety) Academy - China
Treasure Hunts - Global

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.

No legislative or governmental requirements for buyers or suppliers to undertake this action, or links to government programs.
 

Objective Buyer objectives:

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.



Supplier's drivers:
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.
Date

GE has been a partner in the Guangdong EHS Academy since 2007.

Initiative Summary

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.

 

Integrity 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.

 

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"[2], 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.

  • Helpkit for suppliers in China: The GE team in China has developed a help kit that is available to GE suppliers via a password protected website that is only available to suppliers. The site includes a list of qualified design institutes at the national and provincial levels, screened to ensure they have the relevant capability to assist suppliers on specific topics, including carbon management. The website offers hazard recognition training materials, with examples of common EHS hazards in manufacturing settings for teaching improved hazard recognition capability. Since 2006, over 6,800 visitors have accessed the supplier help kit Web site. It is not mandatory to use the suppliers recommended by GE, but should be seen as a helpful guide. 
  • EHS Academy: GE is working with peer companies, including Walmart, Adidas, Honeywell, Citibank and SABIC Innovative Plastics to fund the establishment of an Environment, Health and Safety (EHS) Academy in China’s Guangdong province. The Academy is training  EHS managers who are working in supplier factories. GE supported the academy by providing trainers to lead 'train-the-trainer' sessions on overall sustainability issues in advance of the launch of the Academy.
  • Conferences and workshops: In November 2010, GE hosted a conference in Shanghai for 120 Chinese business leaders entitled 'Achieving Energy Efficiency and GHG Reduction at Industrial Facilities'. The conference was sponsored in part by GE, with speakers from ISC, WBCSD, WRI, Walmart and GE, plus three local companies which had recently implemented energy efficiency and GHG accounting activities.  The conference also included sessions on energy efficiency financing, the GHG Protocols and on ISC’s Environment, Health & Safety (EHS) Academies, which provide energy efficiency and GHG accounting training to industries and their supply chains in China.
  • GE has also hosted supplier summits in the United States and China. The China Supplier Summit was held in November 2010, after the Shanghai conference. At this summit, GE also the experiences and benefits of its own Energy "Treasure Hunt". The Energy Treasure Hunt is a process first developed by Toyota and adapted by GE, which works to engage employees in saving energy and costs. Participating employees are split into groups incorporating different departments and functions, and trained to identify energy and resource saving opportunities in the facility. GE's Energy Treasure Hunt has been a success: it has been implemented at over 300 facilities, with more than 3,500 employees trained. GE employees identified more than 5,000 energy efficiency projects and saved 700,000 tCO2eq of emissions and $111 million in operational costs. The Energy Hunts have also been successful among GE suppliers. For example, in Mexico, more than 40 GE suppliers have now undertaken the Treasure Hunt process.

 

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.

Verification/certification

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:

  • GE auditors provide individual coaching to suppliers at the end of an audit on how to save energy.
  • Online helpkit for suppliers in China
  • EHS Academy managers
  • Conferences and Supplier Summits to share best practices, particularly of GE's "Treasure Hunt" procees.

Impacts, Costs & Benefits

Costs

Information not available

GHG Impact

Examples of individual supplier results include:

  • On a recommendation from GE, a representative from a Fortune Electric Wuhan Ltd.,  a Chinese electronics manufacturer,  attended the EHS Academy. This has helped Fortune to strengthen its EHS expertise and leadership. As a result of the training, Fortune increased its energy efficiency and reduced emissions through energy conservation measures and facility upgrades. Between 2009 and 2011, its carbon emissions fell from 752 tons to 610 tons, an improvement of 19%.[*4]

 

  • Through participation in the "Clean Industries" PROFEPA program in Mexico, one supplier of paper and cardboard boxes (Celulosa y Corrugados de Sonora, S.A. de C.V.) reduced emissions by 49% between 2004 and 2008, and reduced electricity consumption per ton of paper produced by 18.4% between 2002 and 2008.

 

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.

Benefits

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