Huawei steps up standard to be the Chinese electronics industry’s poster boy for sustainability
The world’s biggest telecoms equipment supplier spearheads standard for a green supply chain ecosystem on the mainland
Huawei Technologies, the world’s largest supplier of telecommunications equipment, wants to be the face of Corporate China’s sustainability efforts, as the privately held company addresses the growing challenges in its industry.
“We have a chance to do better than listed companies,” Kevin Tao Jingwen, the chairman of Huawei’s corporate sustainability development committee, told the South China Morning Post.
“We have focused our sustainability investments alongside our business growth. We can also make decisions faster to invest in more areas than public companies.”
Huawei, with 170,000 employees around the world, spent US$100 million last year on health and safety initiatives for staff, Tao said, declining to disclose how much the Shenzhen-based company allocates each year for corporate sustainability projects.
According to consulting firm McKinsey & Co., many companies are integrating sustainability principles into their businesses to pursue goals that go far beyond managing their reputation. Examples include saving energy, reducing waste and maximising employee performance.
Huawei has operations in more than 170 countries, which has led it to embed sustainability requirements into its purchase strategies and business processes amid the rapid technological advances in its industry.
“Our stakeholders are placing increasingly high requirements on us, and we are striving to turn these challenges into competitive advantages,” Tao said.
That commitment is nowhere more visible than in Huawei’s recent efforts to build a sustainable supply chain network in China, home to the world’s biggest electronics manufacturing operations.
The company requires all its suppliers to sign a comprehensive Supplier Sustainability Agreement, which covers labour, health and safety, the environment, business ethics and management systems.
Routine audits form part of Huawei’s approach to managing its suppliers. It audited 870 suppliers last year, up from 753 in 2014.
Huawei has intensified its cooperation with other industry players to help establish standards for China’s vast electronics production sector, according to Nasdaq-traded contract manufacturer Flex, previously known as Flextronics International.
“Huawei is one of Flex’s largest customers. We’ve been working alongside Huawei in spearheading the development of IPC-1401, a China-initiated standard for supply chain sustainability,” said Tony Wu, the vice-president of operations at Flex in Zhuhai. “We believe that IPC-1401 standard will further spur the development of a sustainable, green supply chain ecosystem in China.”
The two companies have completed the draft of the proposed standard, and a final version will be released this year.
Collaboration with various governments enabled Huawei last year to dispose of 9.69 tonnes of waste globally, about 97.97 per cent of which were recycled.
In addition, Huawei last year bolstered its cooperation with the Institute of Public and Environmental Affairs, a Beijing-based non-profit organisation that monitors corporate environmental performance. The institute’s software was used to query the energy consumption and emissions of 465 key suppliers.
Tao said Huawei also stepped up efforts against the use of “conflict minerals” -- tantalum, tin, tungsten and gold mined in the Democratic Republic of Congo and other places where mining revenues are used to finance armed conflicts.
According to its eighth sustainability report published in August, Huawei investigated 977 suppliers last year based on the Due Diligence Guidance on mineral purchasing practises by the Organisation for Economic Co-operation and Development, as well as on questionnaires from the Conflict-Free Sourcing Initiative.
Huawei’s first-half revenue this year reached 245.5 billion yuan (HK$285.4 billion), up 40 per cent from last year, on steady sales increase at its core telecommunications carrier, enterprise and consumer businesses. That extended its lead over Swedish rival Ericsson, which posted first-half sales of SEK106.3 billion (US$12.5 billion).