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Suppliers

Our supply chain is complex. It includes high-spend, strategic relationships with suppliers that manufacture medicines for us or supply ingredients to multiple GSK manufacturing plants. It also includes relatively low spend contracts for locally-sourced goods or services such as cleaning products, rubber gloves or laundry services.

Given the size, diversity and global scope of our supply chain we recognise it is possible that suppliers in some countries do not fully respect the human rights of their workers or those in their community. Within our sphere of influence, we have begun work to ensure that our suppliers observe similar standards to ours in their relations with employees and communities.

The first step is to incorporate clauses in our supplier contracts that seek assurances from our suppliers about their commitment to human rights. This includes compliance with minimum wage legislation; provision of a healthy, safe workplace free from discrimination; the right of employees to join an independent trade union; and opposition to all forms of slavery and exploitative child labour.

During 2004 we continued the process (begun in 2003) to include human rights clauses in our central contract templates for use with new suppliers. During 2005 we will be working with local procurement managers to ensure they incorporate appropriate clauses into local contracts. Human rights clauses are also being introduced into contracts for existing suppliers as they are renewed.

Where appropriate, taking into account the varying risk of human rights abuses in different regions, major existing suppliers have been asked to confirm in writing that they comply with GSK’s human rights clauses. We began this process in 2003 by contacting over 400 suppliers and in 2004 we contacted over 650 more suppliers.

The second step is to audit and monitor suppliers. We already conduct regular Environment Health and Safety audits of our contract manufacturers (see suppliers and contractors). In 2003 these audits were extended to incorporate criteria and questions on human rights. There were 35 audits conducted during 2004 and no human rights issues were noted. For other major suppliers, compliance is assessed during regular supplier review meetings conducted by GSK’s procurement professionals.

A guidance document ‘Supplier Compliance with GSK Human Rights Requirements’ has been developed for employees working in procurement. It explains our standard contract clauses on human rights, the importance of supplier compliance with these standards, how to monitor human rights issues during EHS audits and supplier reviews and how to deal with instances of non-compliance. This is part of our Sourcing Group Management process which provides a training and best practice programme for GSK procurement professionals. Human rights requirements are included in the criteria used by procurement for selecting new suppliers.

If a supplier is found not to have met our standards we will work with them to agree improvement plans and achieve compliance. We think this is better than walking away from the problem. However, we will terminate a contract if a supplier will not or cannot work towards compliance.

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