Lenovo 2014 Annual Report Download - page 98

96 Lenovo Group Limited 2013/14 Annual Report
CORPORATE SOCIAL RESPONSIBILITY REPORT
From an EICC Code of Conduct perspective, Lenovo
requires its Tier 1 suppliers representing greater than 95%
of its procurement spend to comply with the code. The
contracts require suppliers to:
• Read, understand and comply with the code
• Receive independent third-party audits at least every
24 months with EICC approved auditors
• Provide Lenovo the audit reports and provide
accompanying corrective action plans
• Require that their primary suppliers also comply with
the code and receive EICC audits as well
In FY2013/14, 100% of the suppliers targeted for the
program had formally executed agreements in place and
a monthly management system was in place to ensure
timely audits. We also require suppliers to conduct annual
EICC Self-Assessments and to report the results in EICC
tools (EICC-ON). Due to our efforts there have been very
limited occurrences of supplier non-compliance.
Lenovo participates with the EICC in the Greenhouse
Gas (GHG) reporting program. In FY2013/14, similarly
suppliers representing over 95% of our procurement
spend reported their emissions. Through focus on
reduction goals, supplier Scope 1 and 2 total emissions
are flat even though Lenovo’s growth in shipments from
the previous two years has increased over 50%. We
have validated that suppliers representing 93% of our
procurement spend have formal published reduction
goals and that 72% have third party verification.
Lenovo made significant progress in FY2013/14 on
Conflict Minerals due diligence policies, programs and
execution. First we adopted the OECD Due Diligence
guidance for Conflict Minerals and the U.S. Securities
and Exchange Commission Dodd-Frank ruling as our
framework and established a clear public policy on
conflict minerals. Secondly, suppliers are required
contractually to establish similar policies and to conduct
due diligence on the source and custody of conflict
minerals in the supply chain. It is important to note
that even though Lenovo and less than 40% of our
suppliers are not subject to the Dodd-Frank ruling, we
are conducting and requiring the due diligence activities
system-wide.
We conducted a full country of origin inquiry using the
EICC Conflict Minerals Reporting Template and then
used the EICC Conflict-Free Smelter Program and other
initiatives to validate that the identified smelters were
conflict free compliant. We determined that suppliers
representing over 80% of our procurement spend have
conflict minerals policies and that they require their
suppliers to conduct the CMRT reporting. Most of our
suppliers have identified all the smelters and refiners in
their supply chain and we are working to ensure they are
conflict-free compliant. We have found that approximately
half our suppliers and the smelters and refiners in our
supply chain are determined to be conflict free compliant.
While the remaining suppliers and smelters may or may
not be validated as conflict-free yet, this is a major
advancement in our efforts to ensure responsible sourcing
of conflict minerals. We will conduct on-going actions
to drive continual improvement in all areas of conflict
minerals compliance.
Lenovo plans to continue optimizing our logistics
programs and working closely with our partners to ship
products in the most environmentally responsible manner.
Lenovo Global Logistics set up a GHG emission baseline
for international shipments in April 2012. The baseline
was verified by Bureau Veritas North America in June
2012. Transportation GHG emissions for FY2012/13
were verified by Bureau Veritas North America in June
of 2013. Global Logistics will expand the baseline and
measurement to domestic transportation and distribution
centers across all Lenovo operations.
Global Logistics has been working on a Pallet Pooling
System project. This project involves the collection of
used pallets from carriers’ facilities in Hong Kong and
their reuse in Lenovo’s distribution center in Shenzhen. It
was estimated that this initiative will reduce approximately
640MT CO2e per year. With the first launch in South
China in June 2013, Lenovo also plans to expand the
project to East China and subsequently to the rest of the
world.