2006 Abridged Global Citizenship Report Vital Responsible Ethical … · 2020-05-12 · products and supplies since our recycling programme began in 1987. And, the momentum for these

2006 Abridged Global Citizenship ReportVital Responsible Ethical Global GovernanceIntegrity Technology Product Innovative ReliableOperations Speed Agility Supply Expert PrivacyTrustworthy Safety Collaborative EmployeeCitizenship Diversity Engaging Customer Relationship Accessible Social MeaningfulProfitable Public Leadership Optimistic ForwardGrowth Inventive Essential Report

Read the comprehensive report online at www.hp.com/go/report

Letter from CEO . . . . . . . . . 2

Global citizenship . . . . . . . 3

Letter from Steve Gill . . . . 4

Country Highlights2006 . . . . . . . . . . . . . . 5

Reducing product environmental impacts . . . 10

Raising standards in HP’sglobal supply chain . . . . 17

Increasing access toinformation technology . . 23

Summary data table. . . . 27

Moving forward. . . . . . . . 28

1939HP founded

1940HP records its first charitable donation: $5 to local charities

1955Matching gift programme startedfor cash donations by employees tofour-year colleges and universities.HP matched employee amount upto $2,000 per year, per school

1957Citizenship objective established byWilliam Hewlett and David Packard

1959Bill Hewlett and local communitybusiness and labour leaders createthe Santa Clara County United Fund

1961HP Core Values established

1976HP starts company-sponsored vanpool programme

1979Launch of HP Standards of BusinessConduct

The Hewlett-Packard CompanyFoundation is founded

1987Product recycling launched internally

1991HP Planet Partners LaserJet printcartridge return and recycling programme started

First environmental report published

1992Launch of Design for Environmentprogramme

1993Domestic partner benefitsintroduced

1994First packaging management systemcreated

Telecommuting policies are formalized,making HP one of the first companiesworldwide to encourage telecommuting

1995Employee Privacy Policy updated

1997HP Planet Partners inkjet print cartridgereturn and recycling programmelaunched

1998First online privacy statement published

1999Accessibility Programme Office created

Better Business Bureau OnLine’s PrivacySeal Programme initiated, with HP asa founding sponsor

2000Accessibility Policy published

e-inclusion programme launched

First Digital Village founded in EastPalo Alto, CA

2001HP self-certified to EU Safe HarbourPrivacy Principles

HP is committed to being a leader on matters of globalcitizenship. First, we will continue to do our best to protectthe environment. Second, we will run our business withthe utmost integrity. And third, we will work to improve thelives of the people in the communities in which we operate.In 2005, HP made some company-wide changes toimprove our ability to grow and scale profitably. KeepingHP financially healthy is a fundamental prerequisite tobeing a valuable global citizen.

In support of protecting the environment, today HP offersrecycling programmes in over 40 countries. HP has recy-cled more than 340,000 tonnes (750 million lbs) ofproducts and supplies since our recycling programmebegan in 1987. And, the momentum for theseprogrammes is accelerating. In 2005, our overallrecycling rate increased by 17 percent over 2004.

HP prides itself on conducting business with integrity. Thisis core to our company values, because it’s not just whatwe do that is important, but also how we do it. We takeour standards of business conduct policies seriously, andwe expect all HP employees to adhere to them. Furthermore,we expect the same ethics, labour practices and operationalintegrity from every partner and contractor with whom wework around the world.

In the wake of some unprecedented natural disasters, HPemployees showed their compassion for their fellow citizens.For example, immediately after the Asian Tsunami andHurricane Katrina, many Hewlett-Packard employees phys-ically travelled to provide aid; volunteered their time andexpertise to get these communities back up and running;and also donated and raised money for relief. HP matchedemployee contributions dollar for dollar, offered paid timeoff for volunteering, and donated services and equipment.

Global citizenship timeline

2006 Abridged HP Global Citizenship Report Letter from CEO Mark Hurd See more details in the full report at www.hp.com/go/report2

Letter from Mark HurdChief Executive Officer and President

As mentioned in 2005, we made some company-widechanges to improve our operations. While these changesare never easy, we have done our best to conduct them withcare, integrity and respect. We streamlined HP’s operatingmodel by consolidating some core functions such as humanresources, IT, and finance. We announced a reduction ofour global workforce by approximately 15,300 people. Wefolded our commercial sales organization and responsibilityfor each respective customer segment, directly into the mostappropriate business group. We moved accountability forregional operations closer to our customers in each geographi-cal area. Our overall objective is to create a more focusedcompany, with clearer accountability and greaterfinancial success.

We at Hewlett-Packard are proud of our global citizenshipefforts in 2005 and of our commitment to this importantwork. And, we will continue to expend every ounce of effortto make sure that we live up to every one of ourcommitments to our customers, our partners, our employees,our shareholders and the communities in which we operate.

Yours sincerely,

Mark HurdChief Executive Officer and President

2002First combined HP Social and Environ-mental Responsibility Report publishedSupply Chain Code of Conduct released

UN Global Compact endorsed

2003Master Privacy Policy publishedHP recycled plastic included in firsthardware productSupply Chain Social and Environmen-tal Responsibility (SER) programmerolled out

Global Citizenship Policy and HumanRights and Labour Policy adopted

225,000 tonnes (half a billion lbs)of electronic products and suppliesrecycled

2004Thirty-four e-inclusion projects managed,in 19 countries on five continents

Electronic Industry Code of Conduct(EICC) co-developed by HP

Business Leaders Initiative on HumanRights (BLIHR) joined

First nationwide in-store electronicsrecycling pilot programme in theUnited States offered with OfficeDepot

‘Envelope-in-the-box’ inkjet cartridgereturn and recycling programmeextended to 13 countries throughoutEurope

2005Fifty-four suppliers at 85 sites auditedin Latin America, Asia and Europe.

225,000 tonnes (half a billion lbs)of electronic products and suppliesrecycled

Handled approximately 2.5 millionproduct units for various reuse options

e-inclusion and education projectsconducted in more than 40 countriesacross six continents

Select HP goals:

2006Eliminate lead, mercury, cadmiumand hexavalent chromium in 100%of electronic products sold worldwide,as defined by the EU’s RoHS Directive

Reduce HP’s on site greenhouse gasemissions by 18% from 2005 levels

Continue to divert 87% of solid (non-hazardous) waste from landfill globally

Conduct supply chain SER audits at90 sites

Conduct auditor training and supplierforums in India, Mexico, EasternEurope and China in 2006

2007Eliminate the use of Brominated FlameRetardants (BFR) in the external caseparts of all new HP brand products

Recycle 450,000 tonnes (1 billionlbs) of electronic products and supplies

Expand supply chain SERprogramme to 60 indirect operations, services and logisticssuppliers

3

Contribution is as fundamental to HP as the technologywe’ve based the company on. For more than 66 years,HP has combined ingenuity and engineering prowess tohelp people worldwide apply technology in meaningfulways to their businesses, personal lives and communities.We lead collaboration across the industry and with gov-ernments and NGOs to address important world issuessuch as economic development, environmental sustainabilityand labour and human rights. We believe the higheststandards of honesty and integrity are critical to develop-ing loyalty. The betterment of our society is not a job to beleft to a few, but it is a responsibility to be shared by all.

Global citizenship: a corporate objectiveHP’s corporate objectives, established in 1957, arecustomer loyalty, profit, market leadership, growth,employee commitment, leadership capability and globalcitizenship. We live up to our responsibility to society bybeing an economic, intellectual and social asset to eachcountry and community in which we do business.

HP delivers on our commitment to global citizenship by:

• Conducting business with uncompromising integrity

• Engaging with a variety of external stakeholders

• Providing resources to improve access to technologyand educational opportunities

• Developing products and services that are environmentally sustainable

• Protecting the privacy of our customers, partners and employees

HP’s goal is to connect our corporate commitment to globalcitizenship with the day-to-day conduct of the HP business.To accomplish this, we have chosen to align our globalcitizenship strategy and priorities with our business strategyto maximize the impact of our investments.

We have established three priorities based on stakeholderconcern, strategic importance to HP’s business and ourability to have an impact. This raises visibility of the issuesinternally and externally and heightens focus across thecompany. We re-evaluate these priorities yearly to assessprogress. As new issues emerge or current priorities areeffectively addressed, we may decide to shift our focus.Our current priorities are reducing the environmentalimpact of our products, raising social and environmentalstandards in our global supply chain, and increasingaccess to information technology. This abridged reportfocuses on these three priority areas.

Measurement and reportingMeasuring and communicating global citizenship perform-ance is fundamental to continuous improvement andtransparency. HP’s Global Citizenship Report is our primarymeans to communicate our nonfinancial policies,programmes and performance to stakeholders. Our com-prehensive web and PDF versions include a wide range ofissues of importance to HP and its stakeholders, as illustrat-ed on the following page. The full report containsextensive metrics across HP’s global citizenship programmeareas and more than 60 performance goals that chart ourfuture direction. This Abridged Global Citizenship Reportfocuses only on our priority issues. Each year, we re-assessthe issues we report upon and consider additional issuesfor inclusion.

See more details in the full report at www.hp.com/go/report 2006 Abridged HP Global Citizenship Report Global citizenship

Global citizenship

This abridged version of HP’s2006 Global CitizenshipReport focuses on HP’sglobal citizenship priorities.The full report online containsadditional information in thefollowing chapters:

• Introduction (HP’s priorities,Executive letters, HP profile, Global citizenship and Economic value)

• Governance and ethics

• Product environmentalimpacts

• Operations

• Supply chain

• Privacy

• Employees

• Customers

• Social investment

• Public engagement

4

The world of HP is made up of 140,000 people in morethan 170 countries around the globe, all contributing tothe overall success of the company and the prosperity ofthose countries in which we do business. I am privilegedto lead HP in the UK and Ireland and would like to giveyou an insight into how the work we do contributes toHP’s global citizenship programme.

HP in the communityHP is committed to supporting the communities in which itoperates by conducting business with an uncompromisingintegrity and playing an active role in important localissues.

Here in the UK and Ireland, we take great pride in ourphilanthropy programme which allows us to support avariety of worthy causes at both a national and locallevel.

Over the last year, these activities have included membersof the Management Team sleeping out in London for theNCH’s (National Children’s Home) “Byte Night” in orderto raise money for the homeless; the launch of the DigitalCommunities project in Belfast; and our ongoing supportto Kelvin School in Glasgow.

We will also officially open a further Digital Communitiesproject in Govan, Glasgow in May 2006.

HP and the environmentHP is constantly looking to improve our environmentalprogramme in the UK and Ireland, and to minimise theenvironmental impact of our business. We are activelysupporting the UK implementation in 2007 of the EU’sWaste and Electrical and Electronic Equipment (WEEE)Directive and also have a key role in the UK Government’sSustainable Procurement Taskforce, helping to promoteenvironmentally responsible purchasing across the publicsector.

An exciting place to workHP employs around 9,000 people in the UK and Irelandin approximately 20 locations. These sites includemanufacturing operations, sales, services, marketing,financial services and administrative functions, making HPa significant employer within the region. The UK is alsohome to HP Labs in Bristol, our second largest investmentin corporate R&D across the world. The Bristol Labs haveparticular strengths in digital media, security and utilitycomputing. It is here that our leading scientists come upwith concepts for the future, inventing new technologiesthat change markets and create business opportunities.Indeed, ‘rendering’ – the technology behind the

animations like Shrek and Madagascar – was developedat Bristol.

At HP, we believe in encouraging our employees to makebest use of their talents. We pride ourselves on ourpeople management and the infrastructure that enablesthis to happen. HP has long been an advocate of flexibleworking and employee diversity, and we were delightedto receive an award for Women in Science andEngineering in the UK in 2005. We make a consciouseffort to create a culture of inclusion because we believe itis critical to fulfilling our vision of connecting everyone tothe power of technology.

Driving UK innovation in ITAt HP, we feel technology can unlock the vast potential inindividuals and communities. We are committed tomaking IT accessible for everyone and welcome thecontinued public investment in the UK science andtechnology base, as well as the Government's proposedten year science and innovation investment frameworkwhich will see an increase in funding for science to £5billion by 2008. We believe the UK is a great place tocarry out our current work at HP Labs, thanks to itsstrength in both design and the social understanding oftechnology.

Mobile Bristol is a good example of how HP has broughttechnological innovation to the UK. A joint project withthe University of Bristol and with funding from the DTI, itaims to create a publicly accessible wireless infrastructurecovering the city centre, bringing increased services tocitizens of Bristol as well as new business opportunities.

As you can see, HP is well established in the UK andIreland and we are all very excited about the future here.

Steve Gill

VP TSG / Managing Director HP UK & Ireland

2006 Abridged HP Global Citizenship Report Letter from Steve Gill VP TSG See more details in the full report at www.hp.com/go/report

Letter from Steve GillManaging Director HP UK & Ireland

5

HP’s initiatives in the environment and philanthropy in theUK and Ireland are fundamental to our goal of ensuringthat we continue to be a truly exemplary corporatecitizen.

HP and the environmentHP has a mature energy conservation program in the UKand Ireland, which seeks to minimise our environmentalimpact. To this end, HP chose to purchase 100% ‘GreenEnergy’ produced from Combined Heat and Power (CHP).

We also believe that it is important to consider the envi-ronment during the full lifecycle of a product and ourenvironmental policy reflects that. HP’s Design for Environ-ment programme considers the environmental impact ofthe product at the design phase. It aims to reduce theenergy needed to manufacture and use our products;reduce the amount of materials used in our products;develop materials that have less environmental impactand more value at end-of-life; and design equipment thatis easier to upgrade or recycle.

Our history and expertise in integrating environmentaldesign practices throughout the product design stage alsoprompted the UK Government to invite HP to sit on theSustainable Procurement Taskforce. This body, created byPrime Minister Tony Blair, forms a key part of the Govern-ment’s revised UK Sustainable Development Strategy, aswell as their stated ambition to become a Europeanleader in sustainable procurement by 2009. In this role,HP has assisted in developing sustainable procurementguidelines to ensure that the public sector leads the way

in responsible purchasing, whilst continuing to encourageinnovation.

HP’s manufacturing operations in Erskine have beenrecognised nationally by the Energy AccreditationScheme in 1997 and 2000 for energy efficiency, due toenvironmental initiatives including the installation of solarpanels which has led to significant reductions in emissionsof CO2.

HP’s commitment to recycling waste materials is equallydetermined. This was clearly demonstrated when we co-hosted a recycling event in West Norwood, SouthLondon. Local residents were invited to bring unwantedor broken household electrical appliances to a recyclingcentre where all goods were collected free of charge.Over 130 local residents disposed of an estimated 3.5tonnes of household electrical waste during the event, sig-naling HP’s dedication to reducing the environmentalfootprint of IT hardware by providing customers with aconvenient and environmentally sound end-of-life solution.

See more details in the full report at www.hp.com/go/report 2006 Abridged HP Global Citizenship Report Country Highlights

Country Highlights 2006

6

HP and WEEE ComplianceThe European Union’s Waste and Electrical and ElectronicEquipment (WEEE) Directive is to be implemented in theUK during 2007. HP has been actively involved in thedevelopment process for the transposition of the directivewith the UK Government. The directive requires that usersof electrical and electronic equipment from privatehouseholds must be able to return their waste free ofcharge and that producers must finance the collection,treatment and recovery of such WEEE. In relation to B2Belectronics waste, financial arrangements for WEEE willbe subject to commercial negotiation between HP and ourcustomers. As a standard term & condition, HP offers freerecycling of HP products covered by WEEE to itscommercial customers, whether or not a replacementproduct is being supplied provided the waste equipmentis returned to an HP designated collection point.

HP will fulfil its obligations under the terms of nationalWEEE legislation in all EU member states. To assist withthis and to ensure fair competition in the market forrecycling of electronic equipment HP has joined forceswith a number of other companies to establish theEuropean Recycling Platform (ERP). This is a common“procurement” platform for recycling electrical andelectronic waste. The ERP was formed to researchrecycling technologies, logistics and tendering methodsfor recycling services to help the four companies preparefor the introduction of the WEEE Directive and to managethe cost of recycling their waste according to the WEEEdirective.

2006 Abridged HP Global Citizenship Report Country Highlights See more details in the full report at www.hp.com/go/report

7

HP and philanthropyIn the UK, HP and NCH (National Children’s Home) havebeen working together since 2002 supporting homelessyoung people, young people leaving care and those withno access to IT. HP has supported NCH through anumber of initiatives during this time.

HP’s senior management in the UK and Ireland haveannually slept out in London for NCH’s “Byte Night” toraise money for the homeless. HP also supports NCH’saccess to IT initiative which seeks to ensure that allchildren and young people, particularly those who aremost disadvantaged, can enjoy and benefit from IT – andmost importantly, use their new skills to improve theirsituation such as by finding a job.

Where possible, HP also tries to support schools in theirefforts to increase computer literacy. We have aparticularly good relationship with Kelvin School inGlasgow, a school for children who have multipledisabilities as well as visual impairments. Alongsidevarious fund raising initiatives, we have providedequipment, financial support and training to help Kelvin’steachers make the best use of their technology whenworking with the school’s pupils.

HP believes that technology can help unlock the potentialin every community. We initiated the Digital Communities

project in Belfast in order to help improve access totechnology in some of the city’s most disadvantagedareas. Through this initiative, we provided four localcommunity groups with state-of-the-art technology,classrooms and IT training. This has given them the toolsto deliver some of the practical skills necessary to achievea more prosperous future and has successfullyencouraged greater cross-community co-operation.

At HP, we also recognise that our employees haveaffinities with individual charities and we are keen toencourage this. Through our “money match” scheme, HPpledges to match the amount of money raised by anindividual for a charitable cause of their choice. Thismeans that many of our sites engage in fundraisingactivities for charities local to them, helping smallercharities carry out their work.

See more details in the full report at www.hp.com/go/report 2006 Abridged HP Global Citizenship Report Country Highlights

SUPPLIERS$53 billion supply chain includes thousands of suppliers worldwide

HPLeading technology solutions provider to consumers, businesses and institutions globally, $86.7 billion in revenue

Addressing the environmental impact of product transportation

Logistics

HP upholds the highest standards for the protection of employees’ personal information

Employee privacy

Global health, safety and wellness strategy designed to optimize the health, safety, quality of life and productivity of employees and their families

Health, safety and wellness

Primary areas of focus include climate change, energy use and waste

Operations

Supplier diversityPolicy and program offer under-represented businesses equal opportunities to become HP suppliers and resellers

Human rights

HP’s global citizenship policy states our commitment to the Universal Declaration of Human Rights

Supply chainSERHP Supplier Code of Conduct provides foundation to extend social and environmental standards into supply chain

Designing products and services that are environmentally sound throughout their life cycles

Design for Environment

Governance and ethics (foundational to all global citizenship at HP)

2006 Abridged HP Global Citizenship Report Global citizenship See more details in the full report at www.hp.com/go/report8

Global citizenship at HPHP is part of a complex global business system, through whichthousands of companies and other organizations collaborateto provide millions of customers worldwide with high qualityinformation technology products and services. Globalcitizenship is fundamental to every part of this system, as illustrated by HP’s programmes represented throughout thisgraphic.

SOCIETY

Packaging engineers strive to minimize the environmental impacts of packaging cost-effectively

Packaging

HP engages with customers, employees, NGOs and other stakeholder groups to understand the issues we face

Stakeholder engagement

EMPLOYEES150,000 employees at more than 940 sites in over 170 countries worldwide

CUSTOMERSMillions of people around the world use HP technology every day

HP strives to attract and retain the best talent and to help employees fulfill their potential

Labour practices

Employees worldwide contribute time, expertise, and products and money (more than $16.6 million in 2005 with HP matching resources) to support local communities

Employees in the community

Policies and programs integrate diversity into the fabric of HP

Diversity

HP offers a wide range of responsible reuse and recycling options to customers worldwide

Product reuse and recycling

We strive to make products and information accessible, including to people with disabilities or the elderly

Accessibility

HP conducts research and analysis to better understand customer views on global citizenship

Customers and global citizenshipHP upholds the

highest standards for the protection of customers’ personal information

Customer privacy

SOCIETYSociety provides the backdrop for our business and global citizenship activities HP invested $45.3

million across more than 40 countries in 2005 to increase access to information technology and promote education

Social investmentHP strives to shape

a broad array of policies that impact the digital economy and support competitiveness, global citizenship and innovation

Public policy

HP Standards of Business Conduct guide all HP employees in their actions, behaviour and decision

9See more details in the full report at www.hp.com/go/report 2006 Abridged HP Global Citizenship Report Global citizenship

As one of the world’s largest IT companies, HP’s greatestimpact on the environment is through our products. HP iscommitted to providing products and services that areenvironmentally sound throughout their life cycles. Thischapter describes our efforts in product design, packaging,reuse and recycling.

Environmental impacts occur at every stage of the productlife cycle: from product design, through manufacturingand transport, to use by customers and, finally, disposalat the end of a product’s life.

Design for Environment Our Environmental, Health and Safety Policy commits us toproviding products and services that are environmentallysound throughout their life cycles. It states that we will“design and manufacture our products to be safe to use andto minimize their environmental impact.” We integrate envi-ronmental design practices throughout the product designstage.

To meet the objectives of our Environmental, Health andSafety Policy, HP established its Design for Environment (DfE)programme in 1992, with three priorities. These prioritiesstill apply today:

• Energy efficiency – reduce the energy needed to manufacture and use products

• Materials innovation – reduce the amount of materialsused in our products and develop materials that haveless environmental impact and more value at end-of-life

• Design for Recyclability – design equipment that is easierto upgrade and/or recycle

Energy efficiencyHP develops products that use energy efficiently, savingcustomers money and lowering energy consumption. Forexample, all of our commercial displays, consumer PCs,business desktop and business notebook PCs meet ENERGYSTAR requirements when configured with the Windows™

Reducing product environmental impacts

• Materials reduction and use of recycled materials decrease virgin materials use

• Reduction in the number of different material types used in a single product potentially adds value at end-of-life

• Reduction in product size uses fewer resources

• Recycled materials are used in some new products

• Restricted substances are reduced or eliminated

Raw materials

• Supplier Code of Conduct helps suppliers address key HP environmental requirements including General Specification for the Environment (GSE)

• DfR features typically enable easier product assembly

• Efficient operations reduce emissions and waste from our operations

• Global ISO 14001 certification helps in establishing effective environmental management processes

Manufacturing

• Conformance to Design for Environment (DfE) standards allows products to meet regulatory requirements

• Eco-labels demonstrate conformance with international environmental expectations and green procurement criteria

• DfE increases materials and energy efficiency

• Recycled content is used, where feasible

• Design for Recyclability (DfR) features facilitate disassembly and recycling

Design

Communities Customers Employees Investors

Reducing environmental impacts and engaging with stakeholders across the product life cycle

2006 Abridged HP Global Citizenship Report Reducing product environmental impacts See more details in the full report at www.hp.com/go/report10

operating system. In addition, virtually all of our imagingand printing products meet ENERGY STAR requirements.Almost all of our LaserJet products require no more than1 watt power in OFF mode. All PC and printing andimaging products with an external power supply arecompliant with the EU Code of Conduct.

HP LaserJet products Like other toners, HP’s LaserJet toner requires heat from afuser to adhere properly to paper. HP introduced “instanton fusing” in 1993 in our consumer LaserJet products andin 1997 in our Workgroup LaserJets. This technologysaves energy because the fuser heats up quickly andavoids the need to maintain power when the machine isidle. We have introduced more than 160 imaging prod-ucts with this technology, and continue to improve energyefficiency even as printing speeds have increased.

We estimate that since 1993 these increases in “instanton fusing” energy efficiency have avoided a total of 3.2million tonnes of CO2 emissions. This is equivalent to ayear’s emissions for approximately 680,000 cars.

• Smaller, lighter products decrease CO2 emissions and transportation impacts and costs

• Improved packaging designs increase the number of products per pallet, reducing product transport environmental burden

• Transportation by sea allows for more efficient shipments with lower environmental impact

• HP participation in Clean Cargo and Green Freight Groups promotes industry-wide reduction in environmental impact

Distribution

• Efficient product design, longer battery life and enhanced power management decrease energy consumption

• Multi-function products reduce energy and materials use

• Environmental product features reduce total cost of ownership

• Server centre optimization reduces system energy use

• HP printing products are efficient and reliable, reducing paper waste and cartridge use

• Products designed for reliability and upgradeability extend functional lifetime, saving IT rollover costs and reducing waste

Use

• HP offers a variety of take-back options, including asset recovery, donation, leasing, remarketing/ refurbishment, trade-in and recycling

• Materials selection and identification increase value at end-of-life and facilitate recycling

• Design features increase ease of disassembly, recycling and material reuse

End-of-life

Legislators/regulators Non-governmental organizations Suppliers Media

11See more details in the full report at www.hp.com/go/report 2006 Abridged HP Global Citizenship Report Reducing product environmental impacts

1 Cost Model for Planning, Developmentand Operation of a Data Centre,Chandrakant Patel, et. al, HP Labora-tories Technical Report. June 9 2005.

Case study: Halo conferencing technology

HP has developed video conferencing technology thatmakes remote meetings more productive while saving time,money and energy otherwise expended on business travel.

The Halo Virtual Collaboration System (VCS) simulates aface-to-face meeting. It offers high definition video withoutspeech delay, giving users the impression that they arelooking through a window into the meeting room.

The Halo VCS, launched in December 2005 in partner-ship with DreamWorks, was piloted at 12 HP locationsin 2005. There are now 13 studios worldwide in thecompany. HP’s Imaging and Printing business achievedan 8% reduction in travel in 2005 by using the Halostudios, thereby avoiding 350 tonnes of CO2 emissions.Use of the rooms has grown by 25% in one year.

Case study: Smart Cooling for data centres

Data centres consume large amounts of energy andgenerate a lot of heat. HP Labs has found that datacentre cooling equipment consumes up to one wattfor every watt of power used by the computer hard-ware1. HP offers a portfolio of energy-savingtechnologies to manage power in both hardware andcooling equipment.

Smart Cooling, which is already in operation, usescomputer modelling and processing demandmanagement to optimize the layout of equipment,decrease cooling demand and control air condition-ing. Dynamic Smart Cooling, which is underdevelopment, will incorporate distributed sensingand control systems to adapt the air conditioningsystem to changing conditions.

Smart Cooling is estimated to decrease data centreenergy consumption by 25%. Dynamic Smart Coolingcould double that.

Materials innovationMaterials innovation at HP is reducing the environmentalimpact of materials we select or already use for HP products.This innovation often aligns with our objective of reducingmaterials and recycling costs. HP considers four aspectsof materials innovation.

Materials substitutionCustomer requirements, legislation and a precautionaryapproach all may influence our replacement of certainmaterials. Where alternative materials do not currentlyexist for specific applications, HP works with the electronicsindustry and our suppliers to find and introduce materialswith lower environmental impact. For example, we continueto investigate alternatives to PVC-coated wires and cablesas well as replacements for TBBPA on printed-wiringboards (PWBs).

Eliminating materials of concernWe communicate materials restrictions to our design teamsand suppliers through our General Specification for theEnvironment (GSE), which prohibits or restricts the use ofcertain substances in HP products and in manufacturingprocesses. The GSE is integrated into our product devel-opment process and into supplier contracts as part of ourSupplier Code of Conduct.

We developed an “active verification” programme tohelp manage the restriction of certain materials from ourproducts. This process includes validation of compliancedeclarations through data sampling and conducting chem-ical analysis of components and materials on both aprogrammed and random basis.

The timeline below lists substances for which HP has estab-lished materials restrictions and identifies substances thatstakeholders have identified as potential materials ofconcern and that HP is considering for possible future materials restrictions.

Reducing material use HP strives to use less material in products through improvedproduct design and technological advances. For example,as the balance of products HP sells has shifted from PCsto notebooks and from cathode ray tube (CRT) monitors toflat panel displays, material use per unit has decreased. Atypical flat panel display uses little more than half the weightof materials and less than 3% the amount of lead as aconventional CRT screen, as well as requiring approximately

Lead in paint Chlorinatedparaffins

Certain azocolorants

Tributyl tin and triphenyl tin

Lead

Nickel onexternalsurfaces

Remaining BFRs in external case parts

1990 1995 2000 2005

PVC from case plastics Mercury/mercury compounds (except bulbs)

Chlorinated hydrocarbons

Hexavalent chromium

Certainhalogenated

diphenylmethanes

Certain polychlorinated naphthalenes

PBB, PBDEand PBDO

Most BFRs (includingdecaBDE) from case parts

DfE programmes started

Ozone-depleting substances

Cadmium

Arsenic/arsenic compounds

Bismuth/bismuth compounds

Beryllium/beryllium compounds

BFRs from circuit boards

Mercury in bulbs

Nonylphenol

Perfluorinated materials

Phthalates

PVC from wires/ cables/packaging

Selenium/selenium compounds

2 Dates refer to when the materialsrestrictions were adopted by HP.Materials in grey have been identi-fied by stakeholders as potentialmaterials of concern. Future possiblerestrictions of these materialsdepend, in part, on the qualifica-tion of acceptable alternativematerials.

HP product materials restriction/substitution timeline2

The European Union RoHS Directive and HP’s response

The RoHS Directive restricts the use of certain substances(lead, mercury, cadmium, hexavalent chromium andtwo flame retardants – PBB and PBDE) in electrical andelectronic products sold in the European Union after1st July, 2006. HP had already restricted four of thesubstances prior to 1999 and is actively ensuring thatall substances regulated by RoHS are restricted inevery HP hardware product to comply with RoHS.

Our goal in 2006 is to exceed RoHS complianceobligations by meeting the requirements of the RoHSDirective worldwide. We shipped our first fully RoHS-compliant products in early 2005.


60% less energy in use.

Innovative and recycled materials HP works with suppliers to identify materials that will reducethe environmental footprint of HP’s products and that ofour customers. For example, HP currently uses recycledpolyethylene (RPET), recovered from inkjet cartridges anddrinking bottles, as a replacement for polycarbonate inthe carriage cover of some scanner products. As theacceptance of this material and availability increase, weexpect to find other uses for this post-consumer material.

Design for RecyclabilityThe appropriate disposal of used computers and otherelectronic equipment is an increasing global concern. HPhas worked for many years to design products that are easierto recycle. We operate several recycling facilities, whichallows us to determine the most effective design featuresto facilitate product recycling.

This experience has resulted in the development of ourDesign for Recycling (DfR) standards to improve the abilityof products to be recycled. These include design featuressuch as using modular design to allow components to beremoved, upgraded or replaced; eliminating glues andadhesives, by using, for example, snap-in features; andmarking plastic parts weighing more than 25g accordingto ISO 11469 international standards, to speed up materialsidentification during recycling.

PackagingPackaging provides essential protection during transit formillions of HP products that are transported around theworld each year. As well as ensuring that products arrivein working condition, we also strive to minimize the envi-ronmental impacts of packaging cost-effectively.

Material quantity and type, transport mode, and recycla-bility influence the environmental impact of HP packaging.Our packaging engineers address these factors by usingguidelines such as the following: design to reduce pack-aging material use while protecting products; eliminate theuse of restricted materials such as lead, chromium, mercuryand cadmium in packaging; and maximize the use ofpost-consumer recycled content in packaging materials.

We track the packaging volume for products we sell inEurope, as required by law. The following table comparestotal packaging in Europe by material type for 2004 and2005, during which time revenue in the Europe/MiddleEast/Africa region increased by 10%.

Total HP packaging materials in Europe by type, 2004-2005 [Tonnes]

Material type 2004 2005

Paper 65,500 56,000

Plastic 10,664 9,250

Wood 1,310 1,000

Metal 135 97

13

Goal for 2006

Eliminate lead, mercury, cadmiumand hexavalent chromium in 100%of electronic products sold worldwide,as defined by the EU’s RoHS Directive.

Goals for 2007

Eliminate the use of Brominated FlameRetardants (BFR) in the externalcase parts of all new HP brandproducts introduced after 31st Dec.,2006 (to be accomplished whilestill meeting stringent internationalfire safety standards).

Eliminate the remaining uses of BFRsand PVCs in HP brand products asacceptable alternatives are identifiedthat will not compromise productperformance and will lower producthealth and environmental impacts.

Goal for 2008

Provide customers, on request, withdeclarations for the materials listedin the Joint Industry Guide (JIG) toMaterial Composition Declarationfor Electronic Products for all newHP products.

Case study: HP Photosmart M22

Through design and material changes, we reduced theweight of packaging from 396 grams per unit for the2003 HP Photosmart 735 to 253 grams per unit for the2005 HP Photosmart M22 (see photos), a 36% decrease.These changes impacted both the product packageand the shipping container. Packaging material costsfell by more than 50%, from $0.69 to $0.32 per unit.

The smaller package size allowed us to increase unitsper shipping pallet from 200 to 340, decreasing palletuse and CO2 emissions from transport per unit by 41%and reducing shipping costs per unit from $1.58 to $1.01.

See more details in the full report at www.hp.com/go/report 2006 Abridged HP Global Citizenship Report Reducing product environmental impacts

Goals for 2006

Use moulded pulp for 10 millionprinters, replacing almost 800tonnes (1.75 million lbs) ofexpanded polystyrene (EPS) foam.

Switch packaging material fromEPS to moulded pulp for the smallform factor business PC inEurope/Middle East/Africa.

Certify HP packaging design teammembers through the IoPP exam byOctober 2006.

HP Photosmart M22

HP Photosmart 735

Product reuse and recyclingBusinesses, governments, customers and the public areincreasingly interested in responsible reuse and disposalof used electronics. Products that are no longer requiredby their original users can sometimes be reused by others.When there is no further use for the product, materialsmay be recycled for use in other products. Materials thatare not recycled must be disposed of properly.

Many customers are concerned that product reuse andrecycling are conducted in a manner that protects users’personal information, conserves resources and minimizesenvironmental impacts. We strive to address these concernsin our reuse and recycling options, and we apply the samestandards and policies wherever we do business, ensuringresponsible recycling3 or disposal wherever it occurs.

HP has recycled computer and printer hardware since 1987.Our end-of-life programmes benefit our customers andthe environment as well as our business. In addition tothe millions of products that we recycle, we collect approxi-mately 2.5 million hardware products each year that arerefurbished, resold or donated.

Take-back options for hardware Customers are increasingly asking for a variety of optionsto help them manage their unwanted computer hardware.HP offers several options for customers to return hardwareequipment when they no longer have a use for it.

Asset recovery. As one of the world’s top IT leasingcompanies, HP handles the disposition of hundreds of

thousands of hardware devices yearly for companies ofevery size. Commercial and public sector customers caneither sell working equipment for a fixed price or return itto HP for auditing, testing, refurbishment and resale or forrecycling, as appropriate. Data security is a major concernfor companies disposing of their equipment, and HP hasextensive experience in this area.

Donation. Customers in the United States can donateworking computer equipment through the HP Donateoption. In partnership with the National Cristina Foundation(NCF), any manufacturer’s hardware with marketablevalue is eligible for donation.

Leasing. HP’s Leasing Programme offers customers analternative to owning and managing used equipment atthe end of its useful life. Customers simply return theirleased equipment to HP at the end of the lease periodand HP manages safe and responsible reuse or recycling.

Remarketed/refurbished products. HP helps extend the lifeof computer hardware through our repair and refurbishmentprogrammes, enabling customers who do not need the lat-est technology to purchase returned equipment, which mayinclude current generation products or older products thatmeet customer requirements.

Trade-in. HP provides customers with the option of tradingin used equipment from any manufacturer when theyupgrade to new HP technology. Customers receive creditfor the value of their old products and the used equipmentis either sold on the secondary market or recycled throughour environmentally responsible recycling processes.

3 In this section, “recycling” refers tothe processing of waste electronicdevices and consumable items forrecovery of materials. The return touse of complete electronic productsis described as “reuse.”

4 As of January 31, 2006.

LaserJet and inkjet cartridges, and hardwareLaserJet and inkjet cartridgesLaserJet cartridges only

Availability of HP return and recycling programs4


Recycling HP has been recycling since 1987. Today, recycling servicesare available in more than 40 countries, regions and territories.

In 2005, HP collected and recycled more than 140 millionlbs (approximately 64,000 tonnes) of used products. Thisbrings the cumulative total since 1987 to more than 750million lbs (340,000 tonnes), which brings us closer toour goal to recycle a billion lbs (450,000 tonnes) by2007.

Global recycling standards HP’s global recycling standards and policies require recyclingvendors to respect high environmental and employmentstandards. Vendors are also expected to conform to ourSupplier Code of Conduct.

Our recycling standards and policies require our vendorsto reuse, recover or recycle materials and components tothe extent practicable. Materials that cannot be recycledare recovered for energy when possible or incinerated tominimize materials sent to landfill. We require vendors tostore, handle and process materials in ways that preventreleases to the environment and we prohibit the export ofmaterials without our approval. HP conducts regular sitevisits and assessments of our vendors.

See our Hardware Recycling Standards and Printing SuppliesRecycling Policy in the full report online.

Product take-back metric (% of sales)

HP reports annually the total weight of electronic productsand supplies that it has recycled. Stakeholders haveexpressed interest in other reuse/recycling metrics. Onetype of metric compares generally the number of prod-uct units reused and recycled with the number ofsimilar product units sold. Calculating the recyclingand reuse rates for electronics products andconsumable items versus the weight of products sold(based on the original sales year of the product) iscomplex. There is great variation in the time betweenproduct sale and product return, because product life-times vary depending on product type and customerusage. Owners may delay returning equipment afterthey no longer use it, storing it for years before it isreturned. Finally, our measurement is complicated bythe fact that we take back hardware equipment producedby any manufacturer. Therefore, the equipment wereceive in a year represents sales from a number of dif-ferent years and from a variety of manufacturers.Experience with this type of metric needs to be gained todetermine if it is feasible and provides useful information.

After evaluating several take-back studies performed bythe U.S. EPA, universities and HP, we have developedan initial methodology (see full report online for detail).

HP’s combined recycling and reuse rate for the 2005 finan-cial year, calculated according to that methodology, was10.3% of sales. Due to the complexity of this calculation,our metric may not be comparable with those of othercompanies.

Vendor assessment We assess vendors to verify that they recycle products inan environmentally acceptable manner.

We require recycling vendors to follow environmental, health,safety, social responsibility and business conduct standards,as identified in our Hardware Recycling Standards, theElectronic Industry Code of Conduct and the HP PrintingSupplies Recycling Policy.

We conduct supplier site inspections, including interviewswith management and employees.

15

5 Hardware recycling data fromEurope/Middle East/Africa and HPLaserJet recycling data are calendaryear. The remaining data are basedon the HP financial year.

See more details in the full report at www.hp.com/go/report 2006 Abridged HP Global Citizenship Report Reducing product environmental impacts

Total recycling—computer and printer hardware and supplies combined,2003–20055 [Million pounds]

2003 2004 2005

150

125

100

50

75

25

0

AmericasEurope/Middle East/AfricaAsia Pacific Total

Hardware recyclingIn 2005, we recycled approximately 32,000 tonnes (70million lbs) of hardware in Europe, 1,700 tonnes (nearlyfour million lbs) in Asia and 18,000 tonnes (40 millionlbs) in the Americas.

Print cartridge recycling HP’s Planet Partners programme offers free return and recy-cling programmes for HP LaserJet and inkjet print cartridges,covering 87% and 80% respectively of the worldwide mar-ket for these products. Customers can easily return used HPprint cartridges for recycling by following instructions in thepackaging, on our website – www.hp.com/recycle – or byphone. They can use a range of methods to returncartridges, including our postage-paid envelopes, labelsand bulk collection boxes. The map on page 10 showswhere these services are available.

No HP print cartridges returned through Planet Partnersare sent to landfills. They are put through a recyclingoperation that recovers a majority of the cartridge plasticsand metals for processing into materials used in newproducts. All remaining materials are incinerated, withenergy recovery when possible.

Case study: HP Australia partners with local and stategovernment in a consumer hardware recyclingprogramme

In July 2005, HP Australia launched a free computerrecycling pilot in the state of Victoria. The project,known as Byteback, was officially opened by theMinister for Environment, John Thwaites. It aims todivert end-of-life computer equipment from landfillsto environmentally responsible recycling. All metal,plastic and components are recovered and recycled,and any components requiring special treatment arehandled appropriately. In the first four months, Byte-back collected 78 tonnes of computer equipmentfor recycling. Mr. Thwaites commended HP for itsleadership: “Hewlett-Packard has shown othermanufacturers of computer equipment that they cantake action to provide cost-effective avenues forresponsible disposal for the benefit of the public andthe environment.”

Goal for 2007

Recycle 450,000 tonnes (1 billionlbs) of electronic products and supplies by 2007. Progress: To date, HP has recycledmore than 340,000 tonnes (750million lbs) since 1987.

Awards

CanadaHP awarded Recycling Council ofAlberta’s 2005 Corporate Leader-ship Award.

HP awarded Recycling Council ofOntario’s 2005 Platinum WasteMinimization Award.

ChinaHP in China awarded the title of‘Best Corporate Citizen’ by theorganization 21st Century, due to itsefforts in environmental protectionincluding product recycling.


Planet Partners cartridge recycling statistics [Worldwide]

LaserJet Inkjet

% of market covered by Planet Partners 87% 80%

Tonnes returned and recycled in 2005 11,130 442

Tonnes of plastic recovered in 2005 3,326 250

Number of cartridges recycled 92 million 20 millionsince programme inception

Number of HP print cartridges returned and recycled worldwide, 1992-20056 [Millions]

6 Includes cartridges returned by customers and cartridges from HPinternally. 2005 figures are based on year-end estimates.

1992 199819961994 199719951993 2002 20032000 20011999 2004 2005

LaserJet print cartridgesInkjet print cartridges

20

8

4

12

16

0

Raising social and environmentalstandards in HP’s global supply chain

17

HP operates the IT industry’s largest and most complexsupply chain. In 2005, HP purchased approximately $53billion of product materials, components and manufacturing,transport and other services. (See map, next page.)

HP’s supply base is heavily concentrated with a limitednumber of suppliers. This allows us to develop partnershipsand work closely with suppliers to implement systemsfor achieving long-lasting conformance with social andenvironmental standards.

HP’s top 500 suppliers represent 99% of the total amountHP spends on product materials. These 500 suppliers arethe focus of HP’s Supply Chain Social and EnvironmentalResponsibility (SER) programme.

HP’s approach In 2002, HP established and released its Supply ChainSocial and Environmental Responsibility (SER) Policy,which built on our own internal Human Rights and LabourPolicy. When developing the HP Supplier Code of Conductin 2002, we benchmarked the codes in the footwear,apparel and telecommunication industries. Our approachis founded on the supplier requirements stated in the HPSupplier Code of Conduct and our General Specificationfor the Environment (GSE), which address product andoperational environmental issues such as restrictions onmaterials used in HP products.

We are implementing the SER policy and Supplier Code ofConduct using a phased approach. In 2003, we introducedHP’s Supplier Code of Conduct to our top 50 suppliers andrequired them to achieve a new set of SER expectationsdefined in the Code.

To date, we have introduced the Code to 450 of ourhigh-priority suppliers, addressing a total of 98% of ourpurchasing expenditure.

Our supply chain SER programme is comprised of fivekey elements:

• A clearly defined policy, vision and direction, supportedby senior management

• Ongoing development and distribution of our policiesand standards (Code of Conduct and GSE)

• Conformity assessment and monitoring

• Corrective action planning based on continuousimprovement

• Internal and external reporting

Management commitment and governance structureHP’s Supply Chain Council, which reports directly to HP’sExecutive Council, is responsible for Supply Chain SERProgramme implementation. The Supply Chain SERprogramme team reports to the Supply Chain Counciland provides regular performance updates to the sourc-ing community. Our product supplier managementcriteria and metrics include SER performance, in additionto technology, quality, cost and responsiveness.

Integration of the SER programme into HP’s mainbusiness processes is key to successful implementation.Significant resources have been dedicated to trainingsourcing staff and to developing tools, processimprovements and communications to ensure that SERrequirements are part of sourcing decisions.

In 2005, we continued our intensive training sessions withour internal auditors. With 130 onsite SER audits completed,the internal auditors are refining their skills and are lookingfor innovative ways to approach SER in the supply chain.

See more details in the full report at www.hp.com/go/report 2006 Abridged HP Global Citizenship Report Raising standards in HP’s global supply chain

Standards Since many electronics industry companies share suppliers,an industry-wide supplier code of conduct allows companiesto work more effectively with suppliers to ensure compliance.

HP demonstrated its commitment by playing a significantrole in the development of the Electronic Industry Code ofConduct (EICC). The EICC aims to foster responsible man-agement and operational practices in the areas of labour,human rights, environmental, health and safety (EHS), andethics across the electronics industry’s global supply chain.

HP’s aim is for all the companies that have adopted theEICC to use common tools as well. The website www.eicc.infodescribes many of the common activities we are workingon based on the common code framework.

In addition, HP requires our suppliers to follow our GeneralSpecification for the Environment, which provides detailsabout the materials allowed in our products.

Over the past year, HP has conducted a benchmarkingstudy of 20 multinational corporations to understand howfreedom of association requirements are incorporated intosupplier codes. As a result, HP has decided to supplementthe EICC with additional requirements to ensure workplaceand compensation issues are effectively resolved.

Suppliers are to respect the rights of workers as establishedby local law to associate freely on a voluntary basis, seekrepresentation, join or be represented by Works Councils,and join or not join trade unions and bargain collectivelyas they choose. As provided by law, employees whobecome worker representatives shall not be the subject of

Americas: $10 billion spendBrazil, Canada, Costa Rica, Mexico, United States

Europe/Middle East/Africa: $3 billion spendCzech Republic, France, Germany, Holland, Hungary, Ireland, Israel, UK

Asia Pacific: $40 billion spendChina, India, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand

1 Semiconductor manufacture 2 Printed circuit

board manufacture 3 Printed circuit board assembly 4 Final product

assemblyPhase of production

Capital investment2

Labour intensity3

Skill of labour force

Chemical intensity

Environmental impact

Level indication:

1 Sites on the map are representative and not an exact description. Locations with the largest sourcing expenditures are shown. Actual manufacturing locations may differ in some cases. Does not include HP-owned and operated manufacturing sites (see Operations).

2 High = Billions of $; Medium = Hundreds of millions of $; Low = One-Tens of millions of $

3 High = 5,000-25,000 workers; Medium = 1,000-5,000 workers; Low = 50-1,000 workers

High Medium Low Note: This is a simplified view of HP‘s production that does not include all product materials or steps.

Major locations of HP product materials, components and services suppliers1

2006 Abridged HP Global Citizenship Report Raising standards in HP’s global supply chain See more details in the full report at www.hp.com/go/report18

“Industry collaboration is themost effective way to raisestandards in a way thatavoids ‘first-mover disadvan-tage…’ ” said Claudia Kruse,Senior Analyst, Governance& SRI, at F&C Asset Man-agement. “…If the industrycan maintain the pace ithas set so far on supplychain management, whilecontinuing to engage stake-holders through the website,we will be on the right track.”

discrimination and shall have access to management andco-workers in order to carry out their representative functions.Workers shall be able to communicate openly with manage-ment regarding working conditions without fear of reprisal,intimidation or harassment. In saying that worker rightsare to be respected as established or provided by locallaw, what HP means is that in countries that have legalsystems that support these rights, they are to be understoodin the context of the definitions, conditions and proceduresthat local law provides. However, basic worker rights toopen communication, direct engagement and humane andequitable treatment must be respected even in countrieswhere they are not given meaningful legal protection.Where worker representation and collective bargainingare restricted by law, suppliers are to facilitate opencommunication and direct engagement between workersand management as alternative ways of ensuring thatworkers’ rights, needs and views are considered andacted upon appropriately and in good faith.

Assessing conformityOur SER programme follows four phases, as defined in the fig-ure below. The aim is to initiate a continual improvementcycle in supplier companies, supported by a managementsystem.

HP does not tolerate serious, repeated violations of ourSupplier Code of Conduct, and in the event that a supplieris unwilling to change, we are prepared to terminate supplierrelationships. In 2005 this sanction was applied to twosuppliers in Mexico.

Improvement planningHP’s programme is designed to create sustainableimprovements in our suppliers’ practices where they fallshort of the Code. To achieve this, we aim to build thecapacity of suppliers to manage SER issues effectively.We first make the business case to our suppliers’ man-agement, backed by a commitment to effectivemonitoring and a clear expectation for cooperation.We have learned that lasting change in the factoryrequires participation at all levels: factory owners, sen-ior management, product line and mid-level factoryfloor managers, and workers.

In 2005, HP held three supplier capacity-building events,one in China and two in Mexico. Through the events (as wellas self-assessments and onsite audits), we taught suppliersa systematic process they could use to sustain change ontheir own.

19

Supply Chain SER management system

HP conducts preliminary riskassessment of the supply base todetermine priorities. Risk criteriainclude geographic location, chem-ical or labour-intensive processes,length of supplier relationship toHP and commitment to global citi-zenship. Suppliers identified as apotential SER risk are formally intro-duced to HP’s SER requirementsand asked to sign a supplieragreement with an SER clause.

Supplier completes bi-annualself-assessment. HP reviews theassessment and provides feed-back, which often leads toextensive dialogue. Based onseveral factors, HP determines ifthe supplier is a priority for anonsite audit.

HP conducts onsite audits. Whenaudits reveal non-conformancewith code provisions, we workwith the supplier to establish a corrective action plan. At a mini-mum, the supplier must submit animprovement plan and schedule forcompletion. After implementation,we verify that the non-conformance and its causes havebeen addressed.

We help suppliers acquire the nec-essary skills, tools and expertise tocontinually improve. This includeseducation and capacity building. HPis working with several organiza-tions to identify the most importantfocus areas for education.

Phase 1: Introduction Phase 2: Assessment Phase 3: Validation Phase 4: Continuous improvement

In August 2005, more than 330 supplier participants filled a Shenzhen,China hotel ballroom for two days of lectures and workshops on HP’sCode and related expectations and assessment and auditing details.

Companies supporting the EICC

Adopted Code in October 2004CelesticaDell (Board member)FlextronicsHP (Board member)IBM JabilSanmina-SCISolectron

Joined the initiative during 2005CiscoFoxconnIntel (Board member)LucentMicrosoft (Board member)SeagateSonyST Micro

Stakeholder perspective

How is HP doing?Hewlett-Packard has taken a leader-ship role by integrating basic humanrights and labour rights norms intoits supply chain monitoring so thatsuppliers producing for the companyare encouraged, expected andchallenged to improve workplaceconditions and respect workerrights. This work has placed HP ina good position to strengthen theElectronic Industry Code of Conductinitiative that has the potential tomake a difference in the lives ofworkers producing for the electronicindustry worldwide.

How would you like to see HPimprove in this area?To make sure improvements inworking conditions are sustainable,HP needs to double its efforts atcapacity building of suppliers,factory managers, supervisors,workers and community groupswith expertise in labour rights,health and safety and the environment.

Rev. David M. SchillingDirector, Global Corporate Accountability ProgrammeInterfaith Centre on CorporateResponsibilityNew York, NY


Performance The table above summarizes HP Supply Chain SERprogramme progress through 2005.

2005 audit resultsIn 2005, HP audited 54 suppliers at 85 sites in Mexico,China, Thailand, Malaysia, the Philippines, Indonesia, Korea,Czech Republic, Poland and Hungary. The charts (below)illustrate aggregated audit results of non-conformances toHP’s Supplier Code of Conduct, showing findings by codeelement and differences between geographic regions.

HP takes every non-conformance seriously and treats it as anopportunity to work with suppliers to improve performance.As expected, the audits we performed in 2005 identifieda higher rate of Code non-conformances than the auditsof our largest suppliers in 2004. This reflects our policy ofauditing suppliers based on their high risk profile. The 2005data summarized in the tables and charts is not, and isnot intended to be, representative of HP’s supply base asa whole or the bulk of our product materials expenditures.

The main findings and challenges highlighted by ouraudits and HP’s approaches to addressing them arediscussed below.

Awareness of expectations and management systems. Themost prevalent finding for HP is the lack of awareness atthe factory level of our expectations. Since HP’s Code isonly three years old, we foresee that communicatingour fundamental requirements will remain a priority forseveral years, complemented by the efforts of other EICCmember companies.

Labour conditions. Worker participation in decisions thataffect working conditions is essential to achieving sustainableperformance improvements. In 2005, a major focus wason improving communication between management andworkers. We look for and ask suppliers to improve docu-mentation, such as accurate pay slips showing wage andpay calculations, rules and regulations, ethics guidelines,and procedures establishing open communicationbetween workers and management. Our audit findingsindicate a strong correlation between good working con-ditions and effective human resources management systems.

475 suppliers (721 sites) riskassessed and engaged

415 suppliers (595 sites) complet-ed self-assessments

HP audited 78 suppliers (130sites)

China and Mexico supplier forums

Held auditor training sessions inChina, Mexico, Brazil and India

Phase 1: Introduction Phase 2: Assessment Phase 3: Validation Phase 4: Continuous improvement

Progress summary table – cumulative through 2005 (See more details in the full report online.)

Labour • Working hours • Non-discrimination • Wages and benefits Health and safety • Emergency preparedness • Dormitory and canteen • Occupational safety Environment • Hazardous substances

Management systems • Labour risk assessment/management • EHS audits and assessments • Labour company commitment • EHS risk assessment/management • Labour audits and assessment • EHS legal and customer requirements General • Supplier management programme • EICC awareness All other

Goals for 2006

Conduct auditor trainings andsupplier forums in India, Mexico,Eastern Europe and China.

Select third-party provider to conduct external verification ofHP audits.

Design and implement standardizedassessment and auditing tools withelectronic industry, including EICCand GeSI partners.

Goals for 2007

Pilot electronic and cross-industrytraining programme for supplier,auditor, worker and purchasingmanager education and training.

Validate and implement a long-termexternal verification model basedon 2006 results.

Design and pilot industry-widereporting format and tools.

Goals for 2008

Implement electronic and cross-industry training programme forsupplier, auditor, worker andpurchasing manager education andtraining based on 2007 pilots.

Agree on HP’s long-term monitoringand external verification modelbased on 2007 results.

Release first industry-wide reportsummarizing progress and challenges.


Major non-conformances by type, 2005 [% of total, worldwide]

Supplier processes for monitoring and controlling overtimeout of line with accepted standards are a particular chal-lenge in the electronic industry supply chain. Experiencein the apparel sector suggests that longer lead times andmore predictable demand are only part of the answer.We impress on suppliers that fair pay and reasonablehours are linked to reduced injuries and illnesses, improvedproduct quality, and lower worker turnover, hiring andtraining costs.

Health, safety and environment. Eastern European suppliershad markedly better environmental, health and safetyperformance than other regions, probably reflecting theirstrong management systems. The main areas for improve-ment elsewhere are proper onsite hazardous materialslabelling; correct handling, storage, and verification ofprocesses for off-site disposal of hazardous wastes; provi-sion of appropriate personal protective equipment andenforcement of its use; effective emergency and fire responsetraining procedures and equipment; and improved hygienein canteens and dormitories. We ask suppliers to trackinjury and illness rates carefully and provide us withdetailed corrective action plans to address specific non-conformances and any shortfalls in their overall management systems.

Case study: Personnel policies

HP’s audit programme led to improved personnel poli-cies and guidelines at a major power supply vendorin China which employs 9,000 workers. During anHP initial assessment review, the auditor noted thatthe supplier lacked adequate policies and guidelines.The supplier had obtained ISO14001 and OHSAS certifi-cates and so our auditors believed that factorymanagement had been exposed to the benefits of man-agement system approaches. The HP auditor observednon-conformances with our Code, including excessive-ly high overtime rates, inadequate factory andhousing facilities, and high worker turnover.

When we discussed these Code non-conformances withthe supplier, it immediately implemented a correctiveaction plan. Since then, management has conducted afull internal review of EHS policies, processes andplans and has established a personnel policy andlabour management system. Wages were reviewedand raised by 20% or more in some cases. Factoryand housing facilities have been improved. The HPauditor believes that the underlying problem was a lackof formal systems and that the improved personnel poli-cies and guidelines should establish a system so thatthese improvements for workers will be sustained.

Additional case studies are available in the fullreport online.

21

4 Reflects average number of non-conformances per Code provision within each category listed.


“When the programmekicked off, there were a lotof doubts from suppliersand HP employeesquestioning if HP wasenforcing an unrealisticgoal and imposing Westernstandards. After two yearsof effort, we see changesfrom the suppliers and HPauditors. They are startingto believe in the global citi-zenship philosophy. The HRand operations managersand workers in the factorysee SER is a goodprogramme. Conformanceto HP’s Code can help firmshire and retain goodemployees. Happieremployees can make thecompany more successful,benefiting everyone.”

– Chi-Luen Lee, HP Global Procurement Services, Greater China

Average number of nonconformances per supplier site audited by region4, 2005

General Labour Labour management system

Health andsafety

Environment EHS management system

Ethics

Major MinorGreater ChinaEastern EuropeLatin AmericaSoutheast Asia

5

2

1

3

4

0

EICC provisions Non-conformances CommentsMajor Minor

GeneralEICC awareness In 2005 HP increased outreach and education through Supplier Forums to help suppliers better understand and

incorporate EICC requirements into their operations.

Supplier mgmt programme HP continues to work with suppliers to develop management processes for suppliers to monitor their own suppliers(including labour contractors) for SER.

LabourFreely chosen employment Processes are generally in place to ensure that employment is freely chosen.

Child labour avoidance Workers below the age of 16 are extremely rare. Non-conformances generally relate to young workers betweenthe ages of 16 and 18 working at night or conducting hazardous work.

Non-discrimination HP continues to work with suppliers to make its expectations clear in this area.

Humane treatment Non-conformances generally relate to unclear communications to workers about disciplinary processes and wage deductions.

Wages and benefits Non-conformances generally relate to use of deductions, varying accounting procedures, lack of worker under-standing of pay calculations, and payment of flat hourly rates or wages despite overtime.

Working hours HP continues to work with suppliers on processes for controlling excessive overtime and providing rest days.

Freedom of association Means for communications between management and workers are generally in place.

Labour management systemManagement system elements Some suppliers lack basic management system elements (policy statements, management commitment, internal risk

assessments, ongoing training for workers beyond new employee orientations, effective corrective action process,communications) for proactively managing risks and ensuring continual improvement in human resources.

Health and safetyMachine safeguarding Non-conformances generally relate to enforcement and monitoring of ongoing use of machine safeguards.

Industrial hygiene HP continues to work with suppliers to evaluate and control workplace exposure to controlled materials and to use personal protective equipment (PPE) appropriately.

Occupational safety Non-conformances relate to the need for appropriate PPE and enforcement of the use of PPE.

Emergency preparedness HP continues to work with suppliers on emergency and fire response procedures, evacuation drills, and equipment.

Occupational injury and illness Risk assessment, reporting, tracking and corrective action processes should be improved in some cases.

Physically demanding work HP continues to work with suppliers on use of ergonomics programmes.

Dormitory and canteen Non-conformances generally relate to hygienic conditions and personal space in dormitories and canteens.

EnvironmentalProduct content restrictions See “Eliminating materials of concern” in Materials innovation section.

Hazardous substances HP continues to work with suppliers regarding on site hazardous materials labelling, handling and storage andmonitoring of vendor processes for off site disposal of hazardous wastes.

Wastewater and solid waste Non-conformances generally relate to monitoring of water and solid waste treatment processes.

Air emissions Exhaust systems for capturing fumes are widely used; air emissions monitoring is widely conducted.

Environmental permits and reporting Permits generally available for inspection.

Pollution prevention and resource reduction In some cases, reduction goals and performance metrics are not in place or reviewed to ensure that they are met.

EHS management systemManagement system elements While ISO 14001 and/or OHSAS 18000 certifications are in place, some suppliers do not perform

comprehensive risk assessments.

Ethics Business integrity Non-conformances generally relate to lack of formal ethics policies or standards of business conduct by suppliers

and lack of worker ethics training and awareness of requirements.

Disclosure of information Processes and contracts generally in place.

No improper advantage Suppliers generally have policies ensuring that bribes are not accepted by management.

Fair business, advertising & competition In some cases, ethics policies do not include fair business and competition statements.

Protection of identity (whistleblower) In some cases, suppliers lack processes for workers and external stakeholders to report confidentially ethical concerns.

Community engagement Suppliers generally participate in community activities and provide donations.

Intellectual property Processes and contracts generally in place.

HP Social and Environmental Responsibility audit conformance summary table, 2005[% of non-conformance among sites audited]

0% of sites1-10% of sites11-20% of sites21-40% of sites41-100% of sites


We use our products, services and skills—in addition tophilanthropic cash contributions—to increase access toinformation technology worldwide.

In 2005, HP made social investments to help schools andlocal communities worldwide in three primary programmeareas: e-inclusion, education, and employee giving andvolunteerism. In addition to our social investments, wealso respond to major disasters by making both companyand employee matching contributions.

The year 2005 was an important milestone for HP, as wetransitioned many of our e-inclusion projects to ownershipby local and regional organizations. What we havelearned from these projects since they were launched in2000 will have an ongoing influence on our decisionsabout future social investments. We also launched aMicroenterprise Acceleration Programme to increaseaccess to technology specifically for microenterprises.

HP makes donations in the form of cash, products, servicesand time. In 2005, HP donated approximately $45.3million in cash and equipment worldwide, representingapproximately 1.3% of our pre-tax profits.

23

Increasing access to informationtechnology

Educatione-inclusionEmployee giving

Partial list of social investment locations during the 2005 financial year

Worldwide giving by type, 2005[Million $U.S.]

Cash 18.0Products and services1 27.3Total 45.3

1 HP equipment granted by HP Philanthropy and Education isoffered at Internet List Price (ILP)value at the time the grant isprocessed. ILP is the price that anend customer would pay if purchasingthrough the HP Direct sales channelon the internet. While product pricesmay vary on different HP websites,in retail stores and in the resellerchannel depending on specials, targeted promotions or discounts,HP granted equipment is not subjectto these promotions and/or discountsand will always reflect the ILP valueat the time the grant is processed.

See more details in the full report at www.hp.com/go/report 2006 Abridged HP Global Citizenship Report Increasing access to information technology

e-inclusionLack of access to computers and the Internet prevents thebenefits of information and communication technology (ICT)from reaching billions of people worldwide – benefitsthat include substantial social and economic developmentopportunities.

HP launched its e-inclusion initiative in 2000 to increaseaccess to ICT and accelerate economic development inunderserved communities. This initiative was both a businessventure and part of our philanthropic efforts, and wasgrounded on collaboration with the international develop-ment community and governments.

In 2005, HP funded e-inclusion projects in 24 countries,through four programmes:

• Micro-enterprise Acceleration Programme

• Digital Community Centres

• Microfinance

• HP i-communities

Micro-enterprise Acceleration Programme centresLaunched in 2005, HP’s Micro-enterprise AccelerationProgramme (MAP) aims to increase access to ICT for micro-enterprises (companies typically with no more than 10employees). We developed close relationships with leadingtraining organizations and established 38 HP MAP LearningCentres in 12 countries where micro-enterprises can access thelatest HP equipment and receive practical training on how touse technology to build their business. MAP Centres are locat-ed in Egypt, Finland, France, Germany, Ireland, Israel, Italy,Malta, Nigeria, Portugal, Russia and the United States.

Digital Community Centres Digital Community Centres (DCCs) provide underservedcommunities with access to ICT and training courses,helping support education and job creation. Each DCC isa partnership of local government, business, public serviceorganizations and HP.

Since 2002, HP has established DCCs in 11 countries:France, Ghana, Hungary, Ireland, Jordan, Portugal, Russia,Senegal, South Africa, the UK and Ukraine. SeveralDCCs have multiple sites and are based in areas withhigh unemployment.

In 2005, HP launched the Belfast DCC which includesfour sites in both Protestant and Catholic areas of the city.It is supported by the Irish and UK governments, Belfast CityCouncil, and several other companies and provides ICTtraining and after-school clubs for local youth. Cross-community

projects encourage collaboration between users fromProtestant and Catholic areas.

The DCC in Miskolc, Hungary, is a joint venture betweenHP, Miskolc University, Tigaz (a gas distribution company)and the Eni Enrico Mattei Foundation (a sustainable devel-opment research organization). Miskolc University providesenvironmental education and premises for the DCC withthe support of the local council, while Tigaz provideslogistics support and helps cover management overheads.

The unrest that swept across France in the autumn of 2005partially took place in the underserved suburbs of Paris,where 85 nationalities and ethnic groups live side by sideand unemployment among the young residents is between30% and 40%. HP has created a DCC there, in the SeineSaint-Denis area, to offer technology training and awardofficial diplomas – necessary for job applications in France,and to steer young people away from delinquency. TheVilletaneuse University of Technology is leading the project’sefforts. Since the project began in 2002, more than 3,000people have been trained and many of them have foundjobs at the nearby Charles de Gaulle International Airport.

Training courses provided at the DCCs have been verysuccessful. For example, more than 1,000 students haveenrolled in training courses at the HP DCCs in Russia andthe Ukraine since their launch in 2004. Courses rangefrom computer literacy to database programming andnetwork design.

Each DCC will be transitioned to local ownership withinthree years. More than half the DCCs are now fully sup-ported by their communities.

Microfinance In 2005, HP concluded work on a microfinance consortiumit led, which started in 2003. The consortium of eight publicand private sector organizations was created to co-developand test an ICT solution for microfinance institutions (MFI).The aim was to catalyze growth in the microfinance sectorand gain expertise about emerging markets. The U.S. Agencyfor International Development partially funded the project.

Together, this cross-sector group developed the RemoteTransaction System (RTS), a hardware and software solutionthat allows financial data to be captured in the field and sentto the head office by cellular network. With RTS, customerscan visit a third-party agent and use a smart card to performfinancial transactions, eliminating the need to prepare,transport and enter hand-written reports. This reduces costsfor rural operations while increasing customer confidenceand decreasing fraud.

2006 Abridged HP Global Citizenship Report Increasing access to information technology See more details in the full report at www.hp.com/go/report24

Three MFIs tested the RTS in Uganda during 2004 andearly 2005. The results suggest that a combination of newtechnologies, business models and capital sources couldexpand the scope of microfinance.

On completion of the pilot programme, HP and its part-ners enabled the creation of a non-profit makingorganization called Sevak Solutions to continue thepartnership’s mission. Sevak Solutions has been grantedthe intellectual property rights for RTS and will provide thetechnology to any microfinance organization through a no-fee open source license.

HP continues to support microfinance as a vehicle for economicdevelopment through an investment of $5 million in the GlobalCommercial Microfinance Consortium, launched in 2005 byDeutsche Bank. Investors from the private and public sectorshave invested $75 million in the fund that will provide creditfor MFIs, enabling them to reach more customers.

HP i-communities HP i-communities were designed as public-private partner-ships in emerging markets and underserved communities.We have worked with local government, non-governmen-tal and community organizations, using ICT to promotesocial and economic development, while allowing us todevelop and test new products, solutions and businessmodels designed specifically for these markets. HP’scommitment to fund i-communities covers three years.

Benefits of HP’s i-communities include increasing literacy,promoting entrepreneurship and job creation, and providingaccess to government, healthcare and education services.

We supported i-communities in Kuppam, India andMogalakwena, South Africa, beginning in 2002. Asplanned, our three-year funding came to an end in 2005and we worked closely with public and private organizationsto facilitate a smooth transition to full community ownershipand accountability. The HP i-community in Houston,Texas, United States, was launched in 2003 and will betransitioned in 2006.

The Future Promoting access to technology will continue to be thefocus for our social investments, through technology grantsfor communities, non-profit making organizations, education programmes and employee giving and volunteering. The lessons we have learned from e-inclusion will help to determine how we make theseinvestments.

EducationQuality education is essential for economic growth, a diverseand skilled workforce, and prosperous future customers.HP’s philanthropic education programmes provide profes-sional development and donate equipment, technicalsupport and cash to schools and universities worldwide.We help educators integrate HP products and solutionsinto their teaching and use them to support learning insideand outside the classroom.

Our education goals are to transform teaching; increaseunderrepresented students in high-tech careers; andenhance student success in math, science and engineering.

HP provides numerous types of grants, of which the followingare a few examples:

HP Technology for Teaching grants provide HP wirelessmobile technology to higher education institutions world-wide, and to primary and secondary schools in theUnited States and Canada. HP has made grants to 457educational institutions in 15 countries since 2004. In2005, HP invested $10 million in Technology for Teachinggrants worldwide.

HP e-learning Model Schools, China. HP and BeijingSmartdot Technology have established computer classroomsacross China, including 28 schools in isolated mountainregions where local people have little or no access to ICT.The participating schools can now access online resourcesfrom all over the world.

Information Society Partnership for Africa’s Development(ISPAD). HP has invested in nearly 400 education projectsin the Europe, Middle East and Africa region. For example,HP is participating in ISPAD’s e-Schools project, whichaims to connect all secondary (or equivalent) schoolsacross 20 countries in Africa within a five-year period. Theintention is to impart ICT skills to young Africans andimprove standards of education.

Science Leadership grants in the United States fund trainingfor teams of educators from low-income K-8 school districtswishing to adopt an inquiry-based approach to scienceeducation. During 2005, HP sent 22 U.S. school district teamsto professional development events offered by the NationalScience Resources Centre. Since 1992, HP’s Science Lead-ership grants have impacted more than 1 million students.

25

Goals for 2006

Transition HP’s 5th Ward i-communityto community ownership.

Connect key MAP Centres into anetwork and transfer their manage-ment to partner organizations.

See more details in the full report at www.hp.com/go/report 2006 Abridged HP Global Citizenship Report Increasing access to information technology

Stakeholder perspective

How do you think HP hasperformed?Cooperation between HP and ORT(Organization for EducationalResources and TechnologicalTraining) is a brilliant example ofreal social partnership betweenbusiness and an NGO. We considerHP’s help not just as traditionalphilanthropy but as an extremelyuseful example of a businesslikeapproach to working with localcommunities in Samara and allover Russia.

How would you like to see HPimprove in this area?Integration is a key word for success-ful social investment. Combiningresources of business, state and“third sector” (NGOs) we can reachcommon goals such as overcomingthe digital divide. We’d like to seeHP as a member of a joint team todisseminate experience of the DCCand MAP programmes in differentregions of the former Soviet Unionwhere we are ready to participatewith our network of more than 50technology training centres.

Alexander Fradkov, DirectorDr. Sergey Gorinskiy, Deputy Director General World ORT Representative Office for the CIS and Baltic States

Increasing the impact of our grants HP partners with the International Society for Technologyin Education (ISTE) to provide training, mentoring, andconferences for U.S. and Canadian K-12 teachers whohave received HP Technology for Teaching grants, to helpthem integrate technology into their teaching. Teacherscan share experiences and learn about new teachingtechniques using ICT through an online learning communityrun by ISTE. HP grant recipients with the most successfultechnology education projects are showcased at the annualNational Educational Computing Conference in the UnitedStates, thus sharing outcomes and successful teachingpractices with thousands of educators in attendance. Inaddition, grant recipients who successfully integrate HPtechnology into teaching and demonstrate a positive impacton student achievement may receive reinvestment LeadershipGrants from HP. In 2005, HP provided reinvestment grantsto 15 K-12 schools in the United States and Canada and12 universities and colleges worldwide.

Employee giving and volunteerismHP employees have a long history of being social, intellectualand economic assets in communities where they work andlive. They demonstrate their commitment to global citizenshipby contributing their time, talents and personal financialresources to communities worldwide.

Many HP business teams organize teambuilding volunteerprojects or annual ‘Volunteer Days’ to support communityorganizations. In the United States, HP employees cantake up to four hours per month of paid company time,with manager approval, to volunteer in schools.

The following list identifies just a few of the many initiativessupported through employee giving and volunteeringduring 2005:

Brazil. Employees at HP Brazil launched the HP SocialMentoring Programme in 2004 to help disadvantagedyouth. The programme grew out of HP’s Digital Garageproject. Each HP volunteer is assigned to a young person

as a personal mentor, and works with them for a year todevelop their skills, help set career goals and increase theirconfidence and motivation. In the first year, half of the par-ticipants found employment and 40% were admitted tocollege or college prep courses.

France. Through the HP France Vous + HP awards, HPemployees nominate an organization that supports educa-tion, humanitarian relief, individuals with disabilities ordisadvantaged groups to receive a cash or HP equipmentaward. In 2005, HP donated $100,000, which wasshared among 24 charities.

Singapore. In 2005, HP Singapore ran ‘V-Challenge’, aprogramme enabling employees to work with charities.Approximately 450 employees gave 3,600 hours to help fivecharities. Events included field trips for autistic children andarts and cooking sessions for hospice patients. Volunteerscleaned wheelchairs and other equipment as well. Employ-ees also raised more than $330,000 (Singapore dollars).

United States. In 2005, HP offered one-to-one matchingfor employee gifts to qualifying organizations, to a maximumof $1,000 per employee per year, within a budgetedmaximum set each year for the overall matchingprogramme. During 2005, more than 10,300 employeesparticipated in the U.S. Employee Giving Programme.Together with HP matching resources, employeescontributed more than $16.6 million in cash andproducts to more than 5,000 community organizationsand schools.

Making a difference through disaster reliefDuring 2005, many HP employees gave time and moneyas part of humanitarian responses to disasters includingthe South Asia tsunami and Hurricane Katrina.

HP, the HP Company Foundation and HP employees donated$4.4 million in cash and products to tsunami relief effortsand an additional $3.5 million to support hurricane Katrinarelief efforts. HP employees from several countries volunteeredto help with both relief efforts.

2006 Abridged HP Global Citizenship Report Increasing access to information technology See more details in the full report at www.hp.com/go/report26

27

HP profile

Number of employees [Approximate] 142,000 151,000 150,000Net revenue [Million $U.S.] $73,061 $79,905 $86,696Earnings (loss) before taxes [Million $U.S.] $2,888 $4,196 $3,543

Economic value

Operating cash flow [Million $U.S.] $6,057 $5,088 $8,028Tax provision (benefit) (U.S.) [Million $U.S.] ($381) $141 $548 Tax provision (non-U.S.) [Million $U.S.] $692 $703 $579Total dividend payments [Million $U.S.] $977 $972 $926Research and development spending [Million $U.S.] $3,686 $3,563 $3,490

Business ethics

Items reported to the Global Standards of Business Conduct team [Number]1 204 378 573Employees terminated, warned or demoted due to escalated ethics violations [Number]2 NA NA 81

Product recycling3

Total cumulative recycling [Million lbs] 496 616 757Number of countries/regions/territories with HP return and recycling programmes 35 36 42HP LaserJet print cartridges returned and recycled worldwide [Millions, approximate]4 10.2 10.8 11.6Inkjet print cartridges returned and recycled worldwide [Millions, approximate]4 1.8 4.4 9.8

Operations5

Greenhouse gas emissions [Tonnes CO2] 1,209,000 1,436,000 1,547,000 Greenhouse gas emissions per unit of floorspace [Tonnes CO2 per meter2] 0.2198 0.2239 0.2544Carbon dioxide impact from business travel [Tonnes CO2] 226,000 253,000 279,000PFC emissions [Index 1995 = 1.00] 1.47 1.49 1.43Electricity use [Million kWh] 2,280 2,684 2,790Electricity use per unit of floorspace [kWh per meter2] 413 418 459Natural gas [Million kWh] 426 444 439Natural gas per unit of floorspace [kWh per meter2] 77 69 72Ozone depletion potential of estimated emissions [Kg of CFC11 equivalent] 8,340 11,109 9,692Water consumption [Million litres] 5,878 5,436 5,723Hazardous waste [Tonnes] 7,840 7,300 6,920Non-hazardous waste [Tonnes] 107,600 113,000 105,200Non-hazardous waste diverted from landfills [% of total produced] 79.3% 81.3% 87.1%Emissions of TRI substances [Tonnes] 812.4 819.7 NA6

Violations resulting in fines [$U.S.] $3,1207 $2,3228 $7,6799

Supply chain social and environmental responsibility10

Supplier spend [Million $U.S., approximate] $52,000 $52,000 $53,000Suppliers engaged [Total, cumulative] 287 363 475SER documentation completed [Total suppliers, cumulative] 213 263 326Audited [Total sites, cumulative] 15 45 130

Supplier diversity (purchasing results)11

Total small businesses [Million $U.S.] $2,108 $3,040 $3,011 Total minority-owned firms [Million $U.S.] $688 $1,100 $1,100Total women-owned firms [Million $U.S.] $254 $397 $424

Employees

Employee training [Approximate total spending, million $U.S.] $259 $279 $275 U.S. workforce demographics [% of total]12

White 78.2% 78.0% 77.6%Black 5.4% 5.3% 5.3%Hispanic 5.7% 5.8% 5.8%Asian 10.3% 10.6% 10.9%Native American 0.4% 0.4% 0.4%

Worldwide workforce demographics [% of total]13

Female 30.0% 29.7% 29.8%Male 70.0% 70.3% 70.2%

Health, safety and well-being

Lost workday case rate14 0.15 0.10 0.11Employees completing on-line office ergonomics self-assessment and training [%, cumulative] 10% 35% 56%Work-related fatalities [Number] 0 0 0

Social investment

Worldwide giving, total [Million $U.S.]15 62.4 61.6 45.3Cash 21.9 16.6 18.0Products and services 40.5 45.0 27.3

Number of countries/regions/territories with e-inclusion projects 14 19 24

2003 2004 2005

HP 2006 Global Citizenship Report summary data tableThis is a summary of performance data from the full report, which includes additional metrics and data. All data are for HP’s financial year (ending October 31 of the year indicated), unless otherwise noted.

1 In 2003 and 2004, this was entitled“Items reported to the Office of BusinessPractices”. Data for 2003 and 2004includes inquiries and allegations receivedthrough the Office of Business Practicesusing the formal reporting mechanisms.Items raised with other compliance func-tions or the Board are not included.2005 data includes inquiries and allega-tions received through the Global SBCteam or escalated through other compli-ance reporting mechanisms that meet acertain threshold. Items raised directly withthe Board or other functions such as HRare not included.

2 Metric introduced in 2005.3 Hardware recycling data from Europe/Middle East/Africa and HP LaserJet recy-cling data are calendar year. The remainingdata are based on the HP financial year.

4 Includes cartridges returned by customersand cartridges from HP internally. 2005figure is based on year-end estimate.

5 In 2005, we updated our estimationmodel, included data from our unoccupiedfacilities and adjusted the 2003 and2004 data accordingly.

6 TRI reports are due to the U.S. EPA by July1 of each year. Therefore, 2005 data arenot available for this report.

7 There were two violations in 2003: a self-reported permit excursion at our Palo Alto,California, U.S. site and mosquitoes breed-ing in a blocked drain at our Singaporemanufacturing facility. We implementedcorrective actions in both cases.

8 The two largest fines in 2004 resulted fromannual fees not being paid on time. Thesefees are now tracked through HP’s work-order system to eliminate future violations.

9 We had one fine in 2005, which camefrom the improper labelling of hazardouswaste drums by a contractor at one of ourCalifornia sites. The site has since updatedseveral processes and conducted additionaltraining with the contractor.

10Data for 2003 are to the end of the firstquarter, financial year 2004.

11All figures are for U.S. purchases from U.S.-based businesses. Figures are for October 1of the previous year to September 30 of theyear indicated. Data for 2003 does notinclude purchases by former Compaq sites.

12Includes employees on leave or paidleave. Total for 2004 equals more than100% due to rounding.

13Includes employees on leave or paid leave.Excludes certain subsidiary employees forwhich data are not available.

14Lost workday case rate is the number ofwork-related injuries that result in time awayfrom work per 100 employees working afull year.

15HP equipment granted by HP Philanthropyand Education is offered at Internet ListPrice (ILP) value at the time the grant isprocessed. ILP is the price that an end cus-tomer would pay if purchasing through theHP Direct sales channel on the internet.While product prices may vary on differ-ent HP websites, in retail stores and in thereseller channel depending on specials,targeted promotions or discounts, HPgranted equipment is not subject to thesepromotions and/or discounts and willalways reflect the ILP value at the time thegrant is processed.

See more details in the full report at www.hp.com/go/report 2006 Abridged HP Global Citizenship Report Summary data table

Moving forward

Please send comments to [email protected]

© 2006 Hewlett-Packard Development Company, L.P. The information contained herein is subject to changewithout notice. The only warranties for HP products and services are set forth in the express warranty statementsaccompanying such products and services. Nothing herein should be construed as constituting an additionalwarranty. HP shall not be liable for technical or editorial errors or omissions contained herein.

4AA0-3580ENW, 03/2006 Printed on 100% post-consumer recycled paper with low-VOC inks.

HP’s global citizenship objective is to continue to increaseour positive impact through our global citizenship workwhile responding to changing needs and seeking areaswhere our investment is most effective.

We remain focused on three challenges for the comingthree to five years: reducing product environmental impacts,raising standards in HP’s global supply chain and increasingaccess to information technology. These are critical issuesfacing our industry and are areas where we believe wecan make a great difference. Although we are pleased withprogress to date, much remains to be done.

Reducing product environmental impactsthrough intelligent product design, materialsinnovation and leading-edge reuse andrecycling systemsHP addresses product environmental impacts in anintegrated fashion, recognizing that the issue hasdimensions across the entire product life cycle. The following goals map HP’s course:

• Eliminate lead, mercury, cadmium and hexavalentchromium in 100% of electronic products sold worldwideby 2006, as defined by the EU’s RoHS Directive.

• Eliminate the use of Brominated Flame Retardants (BFR)in the external case parts of all new HP brand productsintroduced after 31st Dec , 2006.

• Recycle 1 billion pounds of electronic products andsupplies by 2007.

Raising standards in HP’s global supplychain and developing systems to measureand assess supplier performanceHP’s commitment is to expand our Supply Chain Socialand Environmental Responsibility (SER) programme through-out our supply chain. Our objective is to buildcontinuous learning and improvement with suppliersthroughout our industry. Among others, our goals include:

• Conduct initial risk assessments with additional 50 majorproduct materials suppliers and obtain self-assessmentsand agreements from high priority suppliers, in 2006.

• Conduct new and follow-up/verification audits at 90sites in 2006 and at 75 sites in each of 2007 and 2008.

• Conduct auditor training and supplier forums in India,Mexico, Eastern Europe and China in 2006.

Increasing access to information technologyHaving completed and transitioned many of our e-inclusionprojects to ownership by community recipients or regionalpartners, we will continue to increase access to informationtechnology through technology grants with innovative solu-tions that will benefit non-profit making organizations andeducational institutions in communities where HP does busi-ness worldwide. We will also engage employees throughvolunteer and giving programmes to increase access to infor-mation technology in their local communities. The lessons wehave learned from e-inclusion and engagement with educa-tional institutions will affect how we make these investments.

About this report

ScopeThis report describes HP’s globalcitizenship activities worldwide inthe 2005 financial year, unlessotherwise noted.

Currency and measurementAll $ references in this documentare U.S. dollars, unless otherwisenoted. Measures used in the reportare metric, except where stated.Throughout this report, “tonnes”refers to metric tonnes.

GRI guidelinesWhere appropriate, HP uses theGlobal Reporting Initiative (GRI)guidelines as a basis for reporting.

Previous reportsHP published its 2005 Global Citizenship Report (which covered2004 data) in February 2005. Past global citizenship reports areavailable on the Downloads pageon the full report site.

Documents

2006 Abridged Global Citizenship Report Vital Responsible Ethical … · 2020-05-12 · products and supplies since our recycling programme began in 1987. And, the momentum for these