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Case study: How Huawei promotes operational compliance

Huawei is a leading global information and communications technology (ICT) solutions provider whose ICT solutions, products and services are used in over 170 countries and regions globally, serving more than one-third of the world’s population. Operational compliance is, always, high on Huawei’s agenda. Accordingly, Huawei has incorporated compliance requirements into its routine operations in a number of key domains  Tweet This!, such as trade compliance and cyber security.

This case study is based on the 2016 Sustainability Report by Huawei published on the Global Reporting Initiative Sustainability Disclosure Database that can be found at this link. Through all case studies we aim to demonstrate what CSR/ ESG/ sustainability reporting done responsibly means. Essentially, it means: a) identifying a company’s most important impacts on the environment, economy and society, and b) measuring, managing and changing.

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Realising that operational compliance is crucial to the survival of every company, Huawei has established an operational compliance management system that meets industry standards and has been scrutinised by third-party auditors. In order to promote operational compliance Huawei took action to:

  • foster a culture of compliance
  • build a global operational compliance system
  • protect intellectual property rights
  • show zero tolerance for bribery and corruption

What are the material issues the company has identified?

In its 2016 Sustainability Report Huawei identified a range of material issues, such as broadband inclusion for all, compensation and benefits for employees, green products and services, supply chain sustainability management, product safety. Among these, promoting operational compliance stands out as a key material issue for Huawei.

Stakeholder engagement in accordance with the GRI Standards

The Global Reporting Initiative (GRI) defines the Principle of Stakeholder Inclusiveness when identifying material issues (or a company’s most important impacts) as follows:

“The organization should identify its stakeholders, and explain how it has responded to their reasonable expectations.”

Stakeholders must be consulted in the process of identifying a company’s most important impacts and their reasonable expectations and interests must be taken into account. This is an important cornerstone for CSR / sustainability reporting done responsibly.

Key stakeholder groups Huawei engages with:

Stakeholder Group                Method of engagement
Customers/Consumers

 

·      Customer satisfaction surveys

·      Customer meetings

·      Huawei Fan Club (for consumers)

·      Participation in audits, surveys, and collaborative projects on sustainability (e.g., joint audits with the ICT industry’s Joint Audit Cooperation [JAC])

Employees ·      Meetings with employee representatives

·      Employee surveys (e.g., organizational climate survey)

·      Manager feedback process

Suppliers ·      Supplier meetings and audits

·      Supplier contracts and questionnaires

·      Supplier training sessions and conferences (e.g., the Huawei Global Supplier Sustainability Conference)

Governments

 

 

·      Government policy meetings

·      Inputs to government standards and consultations

·      Governmental and inter-governmental conferences

·      Participation in government projects (e.g., green projects of the Chinese government)

Industry/Standards

Associations

 

·      Industry forums and working groups (e.g., ITU, GeSI, EICC, and QuEST Forum)

·      Industry standards workshops

·      Publication of research reports (e.g., the ICT Sustainable Development Goals Benchmark Report )

NGOs and Communities ·      Participation in community projects

·      Attending conferences organised by non-governmental organisations (NGOs) and inviting them to attend Huawei’s conferences

·      Meetings on specific issues of mutual concern

·      Responding to requests for information

Media and Opinion Leaders ·      Individual meetings and interviews

·      Specific events for the media and opinion leaders in key markets (e.g., the Huawei Global Analyst Summit)

·      Inviting the media and opinion leaders to attend Huawei’s events

·      Engagement through social media

Research Institutes/

Academia

 

·      Joint research projects and technology collaboration (e.g., cooperating with a research institute on the ICT Sustainable Development Goals Benchmark Report)

·      Participation in events

How stakeholder engagement was made to identify material issues

To identify and prioritise material topics Huawei carried out surveys among multiple stakeholders, who ranked topics according to importance.

What actions were taken by Huawei to promote operational compliance?

In its 2016 Sustainability Report Huawei reports that it took the following actions for promoting operational compliance:

  • Fostering a culture of compliance
  • Huawei continuously fosters a culture of compliance, both internally and externally, to make sure it can reinforce its compliance system. Thus, in 2016 Huawei shared its compliance concepts and achievements during several meetings with government agencies and partners and continues to implement an individual accountability mechanism to discipline acts of non-compliance, thereby gaining more benefits from its robust compliance culture.
  • Building a global operational compliance system
  • In 2016, Huawei went to great lengths to build an operational compliance system in its subsidiaries outside China. In terms of organisation, Huawei appointed and trained compliance officers for 97 countries and regions. In terms of business development, it engaged with world-class consultants, as part of its wider effort to promote compliance. For example, Huawei ran a pilot project in its German subsidiary, using Germany’s IDW PS 980 standards to comprehensively evaluate the maturity of the unit’s compliance management system. Huawei also established supervisory organisations in subsidiaries, to systematically oversee operational compliance and align the objectives of compliance management with corporate compliance strategy. All these efforts, helped Huawei’s subsidiaries operate in compliance with local laws and regulations.
  • Protecting intellectual property rights
  • Huawei respects the intellectual property rights (IPR) of others, complies with international IPR laws, and resolves IPR issues through negotiation, cross-licensing, and product cooperation in an open, positive and friendly manner. Additionally, Huawei employs legal means to protect itself against malicious infringements on its IPR. In 2016, Huawei became a member of over 360 standards organisations, industry alliances and open source communities, and holds over 300 positions of responsibility within these organisations.
  • Showing zero tolerance for bribery and corruption
  • Huawei adheres to all applicable laws and regulations of the countries and regions in which it operates as well as relevant international conventions, and has launched various activities to increase employee awareness of business ethics and legal compliance. For example, all employees are required to understand and sign its Business Conduct Guidelines (BCGs) and pass an online test on the subject every year, to increase their awareness of anti-bribery and anti-corruption efforts. Employees also receive training on the BCGs, with special training and awareness campaigns targeting staff in sales, procurement, and other key positions. In addition, to increase its positive influence on suppliers, Huawei includes strong ethical provisions in all contracts with suppliers, and requires them to understand and sign its Honesty and Integrity Agreement. Huawei has also established complaint channels through which employees and other parties can report unethical and illegal behaviour, and carries out compliance risk appraisals, to identify all potential risks and non-conformances.

Which GRI Standards and corresponding Sustainable Development Goals (SDGs) have been addressed?

The GRI Standards addressed in this case are:

1) Disclosure 205-1 Operations assessed for risks related to corruption

2) Disclosure 205-2 Communication and training about anti-corruption policies and procedures

3) Disclosure 205-3 Confirmed incidents of corruption and actions taken

4) Disclosure 419-1 Non-compliance with laws and regulations in the social and economic area

 

Disclosure 205-1 Operations assessed for risks related to corruption corresponds to:

  • Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
  • Business theme: Anti-corruption

Disclosure 205-2 Communication and training about anti-corruption policies and procedures corresponds to:

  • Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
  • Business theme: Anti-corruption

Disclosure 205-3 Confirmed incidents of corruption and actions taken corresponds to:

  • Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
  • Business theme: Anti-corruption 

Disclosure 419-1 Non-compliance with laws and regulations in the social and economic area corresponds to:

  • Sustainable Development Goal (SDG) 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
  • Business theme: Compliance with laws and regulations

 

80% of the world’s 250 largest companies report in accordance with the GRI Standards

SustainCase was primarily created to demonstrate, through case studies, the importance of dealing with a company’s most important impacts in a structured way, with use of the GRI Standards. To show how today’s best-run companies are achieving economic, social and environmental success – and how you can too.

Research by well-recognised institutions is clearly proving that responsible companies can look to the future with optimism.



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References:

1) This case study is based on published information by Huawei, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original, please revert to the original on the Global Reporting Initiative’s Sustainability Disclosure Database at the link:

http://database.globalreporting.org/

2) http://www.fbrh.co.uk/en/global-reporting-initiative-gri-g4-guidelines-download-page

3) https://g4.globalreporting.org/Pages/default.aspx

4) https://www.globalreporting.org/standards/gri-standards-download-center/

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