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The Philips Supplier Sustainability Involvement Program focuses on encouraging supplier commitment by setting requirements, building understanding of requirements, monitoring identified risk suppliers, working with suppliers to reach compliance, and engaging stakeholders. Using an audit-based approach, Philips promotes adherence to standards in environmental impact reporting, pollution prevention, resource reduction, hazardous substance management, air emissions monitoring, and materials use in their supply chain.

SCI Information

Activity types Reporting and Monitoring, Purchasing Approaches, Capacity building and implementation support, Audits, Mandatory supplier requirements
Organisation leading the initiative Philips
Region from which the initiative is led Netherlands
Supplier's location Global
Supply chain sectors targeted
Philips has direct business with approximately 10,000 product and component suppliers and 30,000 service providers, leading them to develop an audit approach based on the supplier’s risk profile with respect to sustainability, country, spend, business risk, and relationship to Philips.
Program or partnership linkages CDP-IIP Action Exchange Program, IDH, The Sustainable Trade Initiative, Electronics Industry Citizenship Coalition (EICC)

Philips executes its Supplier Sustainability Involvement Program in compliance with the Electronic Industry Code of Conduct (EICC). The EICC provides the electronics industry with a platform to develop standardization tools and process, helping to develop a standard that can be used in the industry to compare performance. Philips is also participating in the Action Exchange program with CDP and the Institute for Industrial Productivity, which is a collaborative partnership aiming to improve supplier-purchaser supply chain efficiency for CDP Supply Chain Members and their suppliers. Philips also participates in the Dutch Sustainable Trade Initiative (IDH), which seeks to accelerate and upscale social and ecological sustainability in mainstream commodity markets. Its goals include improving energy efficiency and overall performance of supplier factories.

Policy linkages None
No legislative or governmental requirements for buyers to undertake this action.
Objective Buyer objectives:

Supplier sustainability is a performance indicator in Philips’ EcoVision roadmap to sustainable operations, and part of their stated goals to improve people’s lives, improve energy efficiency of Philips products, and close the materials loop.



Supplier's drivers:
Suppliers participate in this initiative as a requirement for doing business with Philips. Suppliers may also participate to achieve their own sustainability objectives, or in order to capture savings opportunities.
Date
2006

Initiative Summary

Description of the scheme

Supplier Sustainability Involvement Program

 

1. Creates commitment through a Supplier Sustainability Declaration and a Regulated Substances List. Philips requires all their suppliers to conform to the Declaration and List. The Declaration is based on the EICC Code of Conduct, and (among others) includes stricter requirements on environmental impact.

 

2. Builds understanding through assistance with training and capability building. This takes the form of training sessions, supplier day events and briefings, and self-assessment questionnaires.

 

3. Monitors identified risk suppliers through risk assessments, self-assessments, and audits. Onsite sustainability audits are carried out with identified risk suppliers, using third party auditors and the Philips Supplier Sustainability audit tool.

 

4. Manages risk by resolving noncompliance, consequence management, and a 3-year repeating audit cycle. Philips expects suppliers to take initiative to resolve noncompliance issues found in an audit. Philips helps the supplier create a Corrective Action Plan to specify the required steps, milestones, and responsibilities.

 

5. Works with shareholders through transparency and constructive dialogue.

Requirements on or activities undertaken by the target group

Through its Supplier Sustainability Program, Philips expects several activities of its suppliers. Philips requires every supplier to share its commitment to promoting environmentally responsible management, detailed in the Supplier Sustainability Declaration. The Declaration defines the environmental responsibility of suppliers: rules relating to environmental permits and reporting, pollution prevention and resource reduction, among others.

 

Suppliers are expected to implement internal compliance controls. This includes using EICC risk assessment tools for training and building awareness. Suppliers are also encouraged to carry out self-audits with the Philips Supplier Sustainability audit tool available on the web.

 

Suppliers are expected to provide Philips with a regular status overview of their conformance with the Declaration during audits. Large suppliers are expected to pay for audits. If non-conformance issues are identified during audits, the supplier is expected to resolve the issue within a time period agreed upon by Philips and the supplier. In the event of major non-conformance, Philips expects the supplier to produce a written Corrective Action Plan based on the recommendations of the audit.

Verification/certification
Philips uses third party 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.
Tools and resources (includes use of external platforms for capturing suppliers' data)
Philips encourages the use of EICC risk assessment tools for training and building awareness, as well as the Philips Supplier Sustainability audit tool available on the web for carrying out self-audits. Based on supplier and non-compliance characteristics, Philips offers sustainability experts to help resolve non-compliance.

Impacts, Costs & Benefits

Costs
No data found
GHG Impact

No data for direct impact of the program, but general operational carbon footprint changes are provided: http://www.annualreport2013.philips.com/content/interactive_chart/index_en.html

Benefits
Generally, Philips regards its Supplier Sustainability Program as a tool to develop a mutually beneficial relationship with suppliers, where suppliers benefit through continued business with Philips and improved operations, and Philips benefits by creating a more efficiency supply chain.