GE Citizenship

Suppliers

GE sets expectations for its suppliers regarding environment, health, safety and employment practices and conducts on-site inspections of many suppliers, mostly in emerging markets. In addition to requiring suppliers to address deficiencies identified in on-site assessments, we are working to provide training to suppliers and identify capacity-building projects in places where GE has a significant supplier base. We also did a thorough program review and are currently piloting program refinements designed to encourage GE’s suppliers to adopt their own management approach to ethical business issues.

Progress against 2008 commitments

In 2008, GE expanded its supplier due diligence program to cover freedom of association, discrimination and harassment in line with GE’s Statement of Principles on Human Rights based on extensive benchmarking with other companies, revision of GE’s on-site assessment tools and guidance materials, and development of new training materials for the GE sourcing community.

GE rolled out its expanded program effective January 1, 2008. GE’s goal was to raise supplier awareness and ensure basic management systems with respect to freedom of association; discrimination and harassment are in place. Implementation included training all GE sourcing personnel regarding the company’s supplier expectations for these topics as well as specialized training for personnel who conduct on-site assessments. All on-site supplier assessments and reassessments in 2008 included reviews of these topics.

We found that a significant number of suppliers had not yet adopted basic policies to address worker complaints or to prohibit discrimination and harassment. Approximately 25 percent of the 2,500 suppliers assessed in 2008 were asked to adopt specific policies and procedures prohibiting discrimination and harassment. More than 15 percent were asked to adopt an employee dispute resolution process. In addition, more than 150 suppliers were asked to change their policies with respect to Freedom of Association. As of April 15, 2008, more than 98 percent of these findings were reported closed by the suppliers.

Explore supplier performance against our 2008 capacity building commitments:

Conduct a Thorough Program Review

During 2008, GE held an internal “Summit” to review program achievements to date and to improve the efficiency and effectiveness of our efforts. We worked with Business for Social Responsibiltiy (BSR) to benchmark trends in responsible sourcing programs, to identify emerging issues and to share best practices.

GE’s experience has been that some suppliers make heroic short-term improvement and then slip back after qualification. GE addresses this issue by requiring reassessments of suppliers subject to on-site assessments on a variable frequency. Those with the most significant issues in the prior assessment will typically be audited annually. One of our main findings was that the program is being driven by the frequency of suppliers reassessments. Subsequently, a key output of our program review involves working with our suppliers to improve their performance over time and reduce the need for annual reassessments.

For 2009, we decided to focus more of our efforts on building sustained improvements in long term suppliers to streamline the review of one-time suppliers and to ask all suppliers to take more responsibility for their own performance. We are piloting a management system scoring tool built into our existing site inspection checklist. We will be experimenting with identifying root causes of good and poor performance. For example, in prior work we identified the training of qualified EHS professionals as a critical factor for supplier performance, which led directly to our efforts with the Guangdong EHS Academy. We will be using GE’s traditional analytical tools to identify other actions that can bring more sustained good performance. In return, as suppliers improve, we will be decreasing our assessment frequency.

Metrics

GE has conducted assessments at more than 5,000 suppliers globally since 2002. In 2008, between GE’s initial qualification reviews and repeat assessments, we assessed more than 2,500 suppliers.

As described above, all suppliers subject to an on-site assessment must be reassessed on a variable schedule between one to three years. In 2008, GE conducted more than 1,300 reassessments representing more than 50 percent of all our site assessments.

In 2008, our assessment process identified almost 17,000 findings at approved suppliers.¹ GE requires suppliers to address all findings in a reasonable period and tracks closure in an automated database. As of March 1, 2009, suppliers have closed more than 97 percent of all finding since 2002 and 93 percent of all 2008 findings identified. 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 200 suppliers in 2008 for poor performance in this program.

¹ If GE decides it will not do business with a supplier for business or other reasons, then the findings are not tracked to closure, although the findings are retained in the system in the event the supplier is reactivated at a later date.

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