2010 Commitments & Moving Forward

Improve the Management System Approach

In 2006–08, the Company found that improvements in the EHS and labor practices of our suppliers were most sustainable when suppliers had management systems in place to monitor, measure and improve performance. In 2009, GE began piloting the evaluation of suppliers’ management systems in our overall supplier assessment program, including whether there was dedicated staff to oversee EHS and labor compliance.

The results of the first two years of this approach proved more challenging than anticipated. Many of the suppliers in developing countries have had difficulty fulfilling the management systems elements. As a result, our closure rate for these findings is less than 50%, despite a significant coaching and follow-up effort.

At the Supplier Summit, we decided to change our approach to a longer-term one that focuses on improvement of suppliers’ processes. This program will be developed in 2011 and piloted in 2011–12.

Supplier Training

As many other companies have experienced, even with a regular audit program, it is difficult to rely solely upon periodic audits to instill a compliance and safety culture at supplier sites. At the same time, especially in those parts of the developing world where enforcement is limited, building supplier capacity requires the time and involvement of multiple stakeholders. GE uses multiple approaches to provide training to suppliers:

• Leveraging the on-site assessment process to deliver brief “train-the-trainer” sessions on key issues such as hazard recognition
• Adding compliance and EHS training to the agenda of supplier conferences.
• Classroom training sessions taught by GE professionals to share detailed requirements and best practices. Since 2008, NBCU has been conducting interactive workshops in China, where suppliers are encouraged to discuss their specific compliance challenges. In addition, two training webinars have been developed and rolled out to global licensees to extend ongoing education and drive collaboration opportunities. The discussions focus on ways to address systemic deficiencies and develop solutions to common issues identified in the on-site assessments. For six years, GE China has organized an annual classroom supplier training for suppliers with an emphasis on sharing GE EHS best practices.
• GE Water has developed a supplier “buddy” system for some of its suppliers and has also sponsored suppliers to attend commercially available training programs.
• GE partnered with the Guangdong EHS Academy. GE trainers led sections of the EHS Academy’s “train-the-trainer” sessions in advance of the launch of the Academy. GE experts conducted an EHS seminar around the time of the EHS Academy launch on “Building the Business Case” for good practices and made our global health and safety, industrial hygiene and greenhouse gas experts available for a special event at the EHS Academy.

In November 2010, GE partnered with ISC, the Guangdong EHS Academy and the WBCSD to train about 100 Chinese suppliers on energy efficiency and greenhouse gas emissions reductions. The GE China team also developed a help kit that is available to our suppliers via an external Web site. The site includes a list of qualified design institutes at the national and provincial levels that GE screened to ensure they had the relevant capability to assist suppliers in specific topics. The Web site offers hazard recognition training materials, with examples of common EHS hazards in manufacturing settings for teaching improved hazard recognition capability. Since 2006, over 6,800 visitors have accessed the supplier help kit Web site.

Capacity Building

GE has two major capacity-building initiatives under way. In 2009, our partners at the Institute for Sustainable Communities (ISC) launched the Guangdong EHS Academy. ISC recently received additional funding from the GE Foundation and other donors to expand the program to the Shanghai area. Our local teams are working with ISC and others to ensure these programs are robust and evolving as the needs of the supplier community evolve.

GE continues to work with PROFEPA, Mexico’s environmental enforcement agency, and its Clean Industries (CI) program to encourage suppliers to adopt environmental management and compliance systems. This year, GE will organize more events to encourage suppliers to obtain a Clean Industry Certificate with the support of mentors and PROFEPA representatives.

Metrics

GE has conducted assessments at more than 7,500 suppliers globally since 2002. In 2010, GE’s initial qualification reviews and repeat assessments totaled more than 2,800 suppliers. All GE suppliers subject to an on-site assessment must be reassessed on a one- to three-year schedule. In 2010, GE conducted almost 2,000 reassessments, representing 70% of all our site assessments.

In 2010, our assessment process identified more than 12,500 findings at approved suppliers. GE requires suppliers to address all findings in a reasonable period and tracks closure in an automated database. As of February 15, 2011, approved suppliers have closed more than 95% of all findings since 2002.

As of 2010, we changed our metrics to include suppliers that are currently under review but not yet approved as GE suppliers. When we include suppliers currently in the review process, of the more than 12,500 findings identified in 2010, 85% were closed as of February 15, 2011. GE will track remaining findings to closure¹. While the Company’s experience is that most suppliers seek to meet GE’s expectations, GE terminated approximately 150 suppliers in 2010 for poor performance in this program.