The O2 businesses aim to work with suppliers fairly and ethically and to promote labour standards and environmental protection deep into the supply chain.
We continued to explore the impact of our business throughout the world via our supply chain in 2006. Our approach is to assess suppliers based on their 'risk' potential. If appropriate, we require suppliers to improve their practices.
Our corrective actions have mainly occurred where suppliers lack their own ethical and environmental policies, although we have also tackled specific areas of policy non-compliance. Our actions aim to ensure that our own standards of conduct reach further down the supply chain.
During the year O2 UK assessed supply-chain risks against new criteria: geography and location; use of the O2 brand; visibility to media; visibility to customers; nature of activity (labour intensive or automated).
We also redefined our purchasing categories into high-, medium- and low-risk groups and successfully reached a target to assess high-risk O2-branded device suppliers by the end of 2006. In the cases of six branded devices, we followed up self-assessments with on-site audits and corrective action plans.
In the UK, we will continue to focus on this and other high-risk areas such as accessories, merchandising and call centre services.
Our approach includes:
We spend more than £4.5 billion a year in buying the products and services we need.
Our aim is to award business solely on merit and without favouritism, and we seek the best overall value for money from our suppliers. Our ethical and environmental standards are taken into account during the tender process.
We are members of the Global e-Sustainabilty Initiative (GeSI), a group established jointly by the United Nations Environmental Programme (UNEP), the International Telecommunications Union (ITU) and the information and communications industry.
GeSI addresses social, environmental and ethical issues in our sector. Telefonica O2 Europe is a member of its Board and co-chairs its supply-chain working group with Motorola.
We are also members of the Guidance Group set up between GeSI and the Electronic Industry Code of Conduct (EICC) Implementation Group, an established group of major North American electronics manufacturers that have developed a code of practice in their own supply chains.
This joint initiative is developing common industry tools to identify and manage social, environmental and ethical risks and to ensure that suppliers comply with standards.
During 2006 the initiative has been developing a web-based data management system E-TASC (Electronics-Tool for Accountable Supply Chains) which will be launched in 2007. This will enable subscriber members to gain data from suppliers online which can then be scored and weighted electronically to provide risk assessments, and to form the basis for subsequent audit activity and corrective action plans.
The initiative's common supplier self-assessment questionnaire - in English, Spanish and Mandarin - was adopted in 2005, providing a comprehensive check of labour issues, health and safety, business ethics and environmental practices.
The next phase of this collaboration will be:
We started to adopt these tools into our own processes during 2006. In preparation, we completed awareness training for the UK purchasing teams. These standards will roll out to other O2 companies in the coming year.
