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Proactive engagementon responsible sourcingResponsible sourcing is a top priorityfor Ericsson. We work towardscontinuous improvement to ensureour suppliers meet high social, ethical,human rights and environmentalstandards.Through transparency and engagement, wework to build trust across the value chainfrom suppliers to customers. Our “beyondmonitoring” approach develops our relationshipwith suppliers across three phases:“require,” “assess” and “improve.”> > First, we provide suppliers clarityaround our sustainability and CRrequirements.> > Second, we evaluate suppliers’ sustainabilityperformance through monitoringand audits. This includes identifyingand auditing high-risk suppliers.> > Third, to ensure continuous improvement,we engage with suppliersthrough audit follow-up, Code of Conductseminars and training sessions,and web-based learning.Setting expectationsSuppliers must comply with the requirementsof the Ericsson Code of Conductwhich are included in supplier contracts.The Code of Conduct was updated in2014 to include stronger human rights languagein accordance with the UN GuidingPrinciples on Business and Human Rightsas well as international labor standards.Specifically, maximum working hoursare more clearly set out. Another new provisionprohibits deduction from wages as adisciplinary measure.In 2014 we carried out over 30 supplierseminars to raise awareness on our Codeof Conduct, Occupational Health and Safetyand environmental requirements, and toemphasize the importance of compliance.Assessing riskEricsson uses a risk-based approach toidentify relevant suppliers for Code ofConduct audits. Prioritized risk areasinclude working at heights, road and vehiclesafety, anti-corruption, working hours,labor rights, environmental management,and communication of requirementsfurther down the supply chain.Monitoring performanceIn 2014, 595 supplier Code of Conductaudits and on-site assessments wereperformed by Ericsson’s 197 SupplierCode of Conduct auditors. We view eachof our audits as an improvement activityand expect suppliers to address identifiedfindings. Auditors follow up the actions toensure there is continual improvement inthe supply chain.Year on year, analyses of our auditresults demonstrate significant improvementsin areas such as better workingconditions, fire prevention, training andenvironmental management. Critical findingsamong 32 selected high-risk suppliersaudited in both 2013–2014 declined60% (from 18% to 7%). (See graph p.18).We prefer to use leadership and transparencywith suppliers to encouragecontinuous improvements over time.However, suppliers who repeatedly failto comply with our Code of Conduct riskbeing disqualified for further business.Ericsson | Sustainability and Corporate Responsibility Report 201417