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On January 1, 2012, the California Transparency in Supply Chains Act of 2010 (SB 657) went into effect. This law seeks to increase the quantity of information made available by manufacturers and retailers regarding their efforts, if any, to address the issues of slavery and human trafficking in their supply chains. This in turn allows consumers to make better, more informed choices regarding the products they buy and the companies they choose to support.
Integrity is the foundation of Hewlett Packard Enterprise's global business and our promise to customers and communities. We hold our leadership, employees, suppliers, and business partners to the highest ethical standards and require their compliance with applicable laws and regulations at all times. These expectations are clearly described in Hewlett Packard Enterprise's Standards of Business Conduct (SBC) and supported by additional targeted policies and codes of conduct addressing the behavior of our partners and suppliers. Hewlett Packard Enterprise's Global Human Rights Policy further outlines HPE's commitment to and respect for human rights in its operations.
The core expectations for Hewlett Packard Enterprise suppliers are contained in Hewlett Packard Enterprise's Supplier Code of Conduct which includes provisions that incorporate international labor and human rights standards. HPE requires its suppliers to conform to the standards contained in the Hewlett Packard Enterprise Supplier Code of Conduct ensuring workers at supplier facilities have: (i) the right to freely chosen employment; (ii) the right, in accordance with local laws, to join labor unions on a voluntary basis, to bargain collectively as they choose and to engage in peaceful assembly; and (iii) the right to a workplace free of harassment and unlawful discrimination.
Hewlett Packard Enterprise recognizes that certain groups of workers may be more vulnerable than others to risks of forced labor or human trafficking. To address the potential risks to these workers HPE has issued two specialized supply chain labor standards. The first was introduced in 2013 to address unique risks for student and dispatch workers at supplier facilities in China. The second was introduced in 2014 to address specific risks related to the recruitment and management of foreign migrant workers.
Hewlett Packard Enterprise's efforts to evaluate suppliers' conformity to our requirements and to prevent risks of forced labor and human trafficking in the supply chain include:
We work to sense emerging risks in our supply chain at global, regional, and local levels. We analyze information from our supplier-monitoring program, worker engagement, our extensive stakeholder network, and other external sources to proactively look for and address risks such as those related to forced labor and human trafficking.
To evaluate risks related to forced labor or human trafficking in particular, we analyze indicators such as employment of vulnerable worker groups, the use of third party agents in the recruitment or management of workers, and supplier operations in geographic areas with potential for elevated risks for forced labor or human trafficking.
The information received through our risk sensing feeds into our annual audit prioritization process and other program activities, including those intended to address risks of forced labor and human trafficking.
We primarily focus our Supply Chain Responsibility program engagement on first-tier suppliers, those with which Hewlett Packard Enterprise has a direct contractual relationship, including final assembly suppliers as well as strategic commodity suppliers. If we identify specific risks or an opportunity to have a significant impact, we may engage suppliers deeper in our supply chain with the support of our direct suppliers. We also require our direct suppliers to communicate the Hewlett Packard Enterprise Supplier Code of Conduct to the next tier of suppliers and to monitor those suppliers' compliance with these requirements (See Supply Chain Responsibility: Our approach for more information.)
Hewlett Packard Enterprise's audit program evaluates suppliers' compliance with Hewlett Packard Enterprise's Supplier Code of Conduct and specialized labor standards which, among other things, prohibit both forced labor and human trafficking. Our multiyear audit plan is to audit all high-risk direct suppliers annually. In addition, we conduct targeted assessments in special circumstances such as where an identified specific risk requires deeper investigation. With few exceptions, audit findings are substantiated by at least three different, independent sources of evidence including documents, records, management interviews, worker interviews, and physical observations.
Various types of announced assessments are conducted under this program, including comprehensive on-site audits of supplier practices and underlying management systems, specialized assessments, and investigations into supplier-specific allegations. Our comprehensive audits and specialized assessments are conducted by independent third-party auditors including through the Electronic Industry Citizenship Coalition (EICC) Validated Audit Process (VAP). Our specialized assessments focus on a number of areas including risks of forced labor and human trafficking through our student worker and foreign migrant worker assessments.
A finding of nonconformance with Hewlett Packard Enterprise's Supplier Code of Conduct or specialized labor standards related to forced labor or human trafficking does not necessarily indicate that forced labor or human trafficking has occurred, but may indicate a lack of standard operations or procedures to prevent such an occurrence. Following a finding of nonconformance through an audit or specialized assessment, suppliers are required to produce corrective action plans to outline how they intend to resolve the issues, which HPE then reviews and approves. Hewlett Packard Enterprise has zero tolerance for the presence of forced labor or human trafficking. Suppliers must immediately cease any practices contributing to a zero tolerance issue and report their corrective action to HPE no later than 30 days after the original audit or specialized assessment. Hewlett Packard Enterprise or a third party auditor will then re-examine the finding through a site visit to confirm resolution.
(See the Supply chain responsibility section of the Living Progress 2015 Data Summary for more information on 2015 audit findings.)
Hewlett Packard Enterprise has purchasing agreements or purchase order terms and conditions in place with our direct suppliers requiring them to comply with international standards and applicable laws and regulations regarding forced labor and human trafficking as specified in Hewlett Packard Enterprise's Supplier Code of Conduct. HPE's direct suppliers certify that their operations comply with the laws regarding forced labor and human trafficking through their assent to the relevant terms and conditions in their agreements with HPE.
Although the terms of Hewlett Packard Enterprise's Supplier Code of Conduct do not specifically address "materials" that suppliers incorporate into products, HPE presents the Code of Conduct as a total supply chain initiative and requires suppliers to certify, at minimum, that they require their next tier suppliers to comply, including compliance with laws regarding forced labor and human trafficking. We also require suppliers to monitor the performance of their next tier suppliers against the requirements of the Hewlett Packard Enterprise Supplier Code of Conduct.
As part of the requirements of Hewlett Packard Enterprise's Supplier Code of Conduct and specialized labor standards we require suppliers to develop appropriate policies, procedures and associated documentation to adhere to our requirements and any applicable laws and regulations, including those prohibiting forced labor and human trafficking. We confirm the existence and maintenance of those management systems through our audit program (see section 2 above).
Hewlett Packard Enterprise requires all of its employees to comply with Hewlett Packard Enterprise's Standards of Business Conduct (SBC), which includes provisions prohibiting the use of child, prison or forced labor in HPE operations. Employees are trained on these standards annually and we take all alleged violations of company policy seriously. We respond promptly and conduct investigations when appropriate. Violations of the SBC or HPE policies or rules may result in disciplinary action, up to and including termination. Hewlett Packard Enterprise's SBC has also been adapted for contingent workers through the Hewlett Packard Enterprise Contingent Worker Code of Conduct which is re-enforced through labor contracts.
Hewlett Packard Enterprise provides multiple channels to report concerns about a potential violation of law, company policy, or Hewlett Packard Enterprise's Standards of Business Conduct, including those related to forced labor or human trafficking. (See Report ethics concerns for more information.)
Through Hewlett Packard Enterprise's procurement training program HPE trains employees on how to identify and respond to issues such as forced labor or human trafficking in the supply chain. The program explains the definition, purpose, and enforcement of HPE standards against forced labor and human trafficking as well as how to mitigate these risks within product supply chains.
Beyond our employee training, Hewlett Packard Enterprise also partners with a number of nongovernmental organizations (NGOs) and training partners to raise supplier awareness of and conformance to Hewlett Packard Enterprise's Supplier Code of Conduct and specialized labor standards, including ways to identify and address the risks of forced labor and human trafficking. HPE's supply chain capability building programs have included worker-management communications training, which provides employees access to mechanisms to raise any issues with management or superiors. Since 2008, we have had an ongoing focus on providing training on best practices to prevent risks associated with forced labor or human trafficking in the recruitment and employment of foreign migrant workers. In the past two years we have partnered with other leading IT companies to conduct these training sessions for suppliers and labor agents from Southeast Asia. (See Supplier Management Systems under Capability building in the Supply chain responsibility section Living Progress 2015 Data Summary for more information.)
Another area of concern for the IT industry is the risk that certain minerals mined in the Democratic Republic of Congo may have directly or indirectly benefitted armed groups engaged in human rights violations. In addition to the efforts described above, Hewlett Packard Enterprise has been a leader in conducting due diligence of its supply chain, publishing a list of the smelters of these minerals reported by HPE's suppliers, and being a leader in advancing industry programs and tools that enable companies to source conflict free minerals. (See Conflict minerals for more information.)
Hewlett Packard Enterprise believes partnership with other companies and key stakeholders is critical to eradicating the risks of forced labor and human trafficking in our supply chain. As an EICC member, HPE benefits from the opportunity to participate in the identification and sharing of leading practices with other EICC members. This includes evaluation of the EICC Code of Conduct and development of tools and training to help build the capability of EICC suppliers. Other collaborative alliances with Verité, the Global Business Initiative on Human Rights (GBI), and others allow HPE to exchange information on issues and coordinate how to best protect workers in our supply chain.
For full details of our Supply Chain Responsibility program, see Supply chain responsibility.