Applying standards in the supply chain

Telefónica O2 UK set out to devise policies that help us engage with our suppliers, to meet the demands of our own Business Principles and to develop well-managed supplier relationships.

We ask our direct suppliers to build the principles of our policies and practices  into their own operations. This assures us that their suppliers are in turn held to account.

Since late 2006, Telefónica O2 UK has assessed supply-chain risks against the following criteria: geography and location; use of the O2 brand; visibility to external stakeholders; visibility to customers; nature of activity (labour intensive or automated).

As a result we have defined our purchasing categories into high, medium and low-risk groups.

During the year we concentrated on three main areas identified as higher risk:

• O2 branded devices, which are mainly sourced from China and Taiwan;
• accessories, such as chargers and in-car equipment, which we sell alongside our phones, though not all carry our brand; and 
• merchandising, such as promotional t-shirts, which do carry our brand.

We conducted supplier self-assessments in all three categories during the year and initiated six supplier audits as a result.

Our ethical procurement policy is based on the standards of the United Nations Universal Declaration of Human Rights and the International Labour Organisation conventions.

We have strengthened the implementation of the policy and spell out clearly the conditions under which we would refuse to work with suppliers or cease business with existing ones. We take action if there is evidence of employment of workers below the minimum age, forced or bonded labour, life-threatening working conditions or inhumane treatment.

We also want to demonstrate strong environmental performance and a commitment to sustainable development. Sourcing our products and services in line with our environmental procurement policy  is required in our registration to the international environmental management standard – ISO 14001.

We require our suppliers to have an up-to-date, documented Environmental Policy including commitment to environmental protection, prevention of pollution, compliance with environmental legislation, continuous improvement and a commitment to procure in line with their policy. We also expect to see a management systems approach to environmental aspects and programmes in place for improving environmental performance.

We continue to work with our key suppliers to help improve the energy efficiency performance of our network.

Some existing and/or potential suppliers can access our website at: www.o2.com/cr/suppliers.asp