- To work with suppliers to promote sustainable development and social responsibility
- To establish Huawei's supply chain social responsibility and gain the confidence of global customers
- To integrate CSR standards into the whole procurement process and supplier lifecycle management
- To cooperate with industry peers to solve supplier CSR issues using innovative approaches
To achieve sustainable development of our supply chain, Huawei requires our suppliers to be as committed to sustainable development as we are. We focus on the areas of ethics, the environment, health and safety, and labor conditions. The potential shortcomings of suppliers have multiple implications on a business, including loss of production and a negative brand image through association with the non-complying supplier. As an integral part of a company's value chain, a risk to a supplier is also a risk to our company and our customers. We believe a supply chain is only as strong as its weakest link. That is why we require our suppliers to cascade our requirements down through the entire supply chain.
Huawei established the Supplier CSR Committee chaired by the chief procurement officer. Procurement supervisors and CSR experts sit on the committee, which regularly reviews the strategies, principles, standards, processes, solutions, and performance of supplier CSR management. These reviews ensure that supplier CSR is managed throughout the procurement process and the supplier lifecycle. The Supplier CSR Management Department is responsible for formulating and optimizing the management process and standards, and coordinating for global supplier CSR management. We also established a cross-functional CSR working group, which is headed by our chief CSR expert, to incorporate CSR management into major procurement functions and daily operations and to ensure that suppliers comply with CSR requirements and make continuous improvements. These functions and operations include supplier qualification and selection, on-going supplier management, supplier performance management, and supplier termination.
Huawei communicates the standards, principles, strategies, and programs of supplier CSR management to all our procurement staff and incorporates the above elements into a departmental performance index. In 2011, we provided CSR management training to 223 key procurement staff.
CSR Requirements for Suppliers
Based on the EICC code, SA8000, and ISO26000, aswell as customer requirements and industry characteristics, Huawei has defined our CSR requirements for suppliers and incorporated these requirements into the supplier CSR agreement that must be signed by all suppliers.Building on the Supplier CSR Agreement, Huawei mandates our suppliers to institute a comprehensive CSR strategy into the core of their operations. We view the implementation of these CSR requirements as the foundation for our suppliers to carry out activities in line with their CSR Strategy, and to ensure continual improvement of their practices. Our suppliers benefit, and in turn Huawei and our customers also benefit from their success.
Through the CSR strategy, we expect our suppliers to install systems that incorporate the following aspects:
- Labor Standards
- Health and Safety
- Environmental Protection
- Business Ethics
- CSR Management System
New Supplier Qualification
Huawei qualifies all new suppliers on their comprehensive management systems, including their CSR compliance and management system. We assign CSR experts to audit potential supplier sites on their CSR management capabilities through employee interviews, document review, on-site inspection, and third-party information searches to assess the potential risks as well as improvement opportunities. If deficiencies are found, Huawei will require the suppliers to take corrective and preventive actions in a timely manner. A candidate that fails to meet the CSR requirements will not be accepted as a qualified supplier.
On-going Supplier Management
Huawei integrates CSR into our on-going supplier management process, giving priorityto high-risk countries/regions, high risk suppliers, and high risk issues. In 2011, we optimized our supplier CSR risk ranking tool in accordance with international standards and guidance. Annually, we assess supplier CSR risks and identify the risk level of each supplier. We manage our suppliers based on their risk level, regularly audit high-risk supplier sites, and audit those medium risk suppliers selected based on random sampling approach in order to drive supplier self-management. If problems occur, we will require the suppliers to take preventive and corrective measures, and follow up on their improvement progress until its closure.
Supplier Performance Management
Huawei incorporates CSR into our supplier performance management programs and measures supplier CSR performance based on the supplier audit results and improvement effect. Huawei regularly reviews the CSR performance results with each supplier's top management. We also communicate with strategic suppliers, preferred suppliers, and approved suppliers about their performance results on a quarterly, semi-yearly, and yearly basis, respectively. For suppliers with better CSR performance, Huawei will provide incentives to them, such as increasing their procurement quota. For suppliers with poor CSR performance, Huawei will decrease their procurement quota, restrict bidding opportunities, or in a few special cases terminate the business relationship.
Case Study: Red Card System
Safety and health is always a top priority for construction projects. By adhering to the principle of "Safety First", we have established a Red Card System that applies to engineering service subcontractors. Huawei's project managers, QA engineers, and safety managers regularly check whether the construction sites of engineering service subcontractors are safe in order to determine the safety and health risks in the construction process. In case a major safety risk is identified, Huawei will require the subcontractor to take prompt corrective measures. If a significant risk is exposed and the subcontractor fails to take immediate corrective measures, Huawei will issue a Red Card and ask the subcontractor to stop site work immediately and take corrective measures until the risk is reduced or eliminated.
Suppler CSR Management Highlights
CSR Risk Ranking
Huawei Green Partner Program
The product environmental program is an integral part of Huawei's supplier CSR management. In 2011, Huawei continued implementing the Huawei Green Partner (HW GP) certification program. The program standards cover all regulations, directives, and requirements related to product environmental requirements. Its goal is to ensure that all products and parts are free from chemicals that are restricted by relevant laws and regulations and in line with customer requirements.
In 2011, 27 suppliers passed the certification process and became Huawei's green partners. The HW GP program encourages innovations in energy saving and emissions reduction to build green supply chains.
Supplier Capability Building
The sustainable solution to tackling supplier CSR issues is to enhance suppliers' awareness and self-management capabilities. Huawei conducts several supplier conferences globally every year. At these conferences, Huawei executives and experts introduce our supplier CSR requirements, standards, and programs to the top management and key managers of our key suppliers. We also invite senior management and experts of our customers to introduce global CSR trends and demands, and invite supplier representatives to share their successful experiences and achievements. We also organize training sessions and workshops for suppliers to address the challenges and difficulties of CSR management to enhance their CSR management capabilities.
In 2011, Huawei introduced the CRCPE (Check, Root Cause, Correct, Prevent, and Evaluate) five-step method to guide suppliers in tackling CSR problems with this innovative and systematic approach. This method includes the following:
1. Check: Regularly check against identified deficiencies and CSR requirements to identify and analyze similar deficiencies and relevant risks, especially management deficiencies; list prioritized issues.
2. Root cause analysis: Ask five whys against the identified deficiencies to investigate the root causes until management system failures.
3. Corrective actions: Eliminate the identified deficiencies or mitigate risks with specific and traceable actions and evidences.
4. Preventive actions: Eliminate the identified root causes including developing or optimizing management systems and capabilities to prevent re-occurrence.
5. Evaluate: Assess the effectiveness and quality of corrective and preventive actions against relevant regulations and standards, verify whether the problems are resolved or the risks are reduced and identify continuous improvement opportunities.
Through learning and implementation of the CRCPE five-step method, the suppliers who participated have significantly improved their capabilities and have been able to make continuous improvement. When problems do arise, these exercises will also reduce the time it takes to solve a problem.
Case Study: 3rd Annual Huawei Global Supplier CSR Conference
In September 2011, Huawei held the 3rd Annual Global Supplier CSR Conference with the theme of "Commitment and Innovation", which focused on the commitment of sustainable development and behavior change through innovation. The conference was attended by 360 people from six key customers, including senior executives of Telenor, Deutsche Telekom, Vodafone, British Telecom, France Telecom, and China Mobile as well as 174 suppliers. The Chief Operation and Delivery Officer of Huawei gave the opening speech on "CSR, foundation for sustainable development" and emphasized the importance of supplier CSR management. During the conference, Huawei's CSR expert introduced CSR management processes and innovative approaches to resolving CSR issues. The representatives from our customers discussed international trends of CSR and sustainable sourcing principles and a supplier representative shared an innovative method to address CSR issues. All the participants at the conference signed CSR Commitments.
Cooperation with NGO
Huawei participated in a Green Choice initiative facilitated by an NGO and applied the environmental performance data of enterprises in China to our supplier CSR management program. This NGO regularly collects nationwide enterprise environmental performance data and maintains an online database, which is updated on a monthly basis. By applying this database to our supplier qualification and on-going management process, we are able to quickly identify possible environmental violations of our suppliers and push suppliers to correct them immediately.
Case Study: Conflict Minerals
Minerals such as tin, tantalum, tungsten and gold (3TGs) which originate in the Democratic Republic of Congo (DRC) or adjoining countries are known as "conflict minerals" since the profits from their sale allegedly finance continued armed conflicts in these countries. Huawei takes this issue very seriously and is actively addressing it.
The issue of conflict minerals is well known in the electronics and other industries, and is extremely complex. Resolution will require the commitment and cooperation of businesses, governments and NGOs. Huawei neither procures nor supports the use of conflict minerals and requires all suppliers not to procure conflict minerals. Huawei also asks suppliers to cascade this requirement to sub-tier suppliers. In 2011, 441 key suppliers signed commitments not to procure or use conflict minerals.
Huawei continuously supports industry collaboration to address supply chain CSR issues. We continue to participate in efforts with customers and suppliers through the Global e-Sustainability Initiative (GeSI) to seek a sustainable solution to the conflict minerals issue.
Huawei has incorporated CSR into our procurement process and daily operations to the point where it is a vital part of the normal business process and an integral part of the commercial decision-making process.
As stated by the Chief Operation and Delivery Officer of Huawei, "Today, CSR is simply part of Huawei's DNA".
We will persist in embracing this spirit and work closely with our suppliers to continuously promote the CSR management capabilities of the global supply chain and effectively reduce risks. As long as our suppliers demonstrate their efforts to improve their CSR management capabilities, Huawei will continue to support them.
As Huawei's chief procurement officer said, "We all live on the same planet, breathe the same air, and drink the same water. It is up to all of us in business to go beyond our financial goals of making profit and use our influence to cause our suppliers to meet their social responsibilities as well."