Microsoft to Require Annual Sustainability Reporting by Vendors 

Program stems from conversations with New York City Comptroller John C. Liu’s office on behalf of the New York City Pension Funds.

Microsoft Corp. today announced that it will launch a new effort to enhance the information it shares about its vendors’ commitment to social and environmental policies, programs and performance in its annual Citizenship Report.

Starting in 2013, Microsoft will require a cross section of its suppliers to provide reports on their adherence to the requirements listed in the existing Microsoft Vendor Code of Conduct. The code of conduct sets standards for legal compliance, business ethics, labor and human rights standards, environmental protection, and respect for intellectual property. The new reporting mechanism complements and strengthens Microsoft’s existing auditing and assurance programs, which include third-party monitoring of its contract hardware manufacturers. The reporting requirement will also drive sustainability improvements in Microsoft’s supply chain. More information on Microsoft’s current Responsible Sourcing Initiatives is available at Microsoft’s 2011 Citizenship Report. Microsoft is taking this step in response to a shareholder proposal received from New York City Comptroller John C. Liu on behalf of the New York City Pension Funds. 

“We appreciate and value the discussions we’ve had with Comptroller Liu’s office and the opportunity to continue our collaborative work with shareholders on initiatives that further demonstrate our commitment to corporate citizenship,” said Brad Smith, general counsel and executive vice president of Legal and Corporate Affairs for Microsoft. “This new reporting requirement will help shareholders, customers and others understand how Microsoft and its suppliers are meeting their expectations for social responsibility.”

Microsoft will begin informing a dozen of its key vendors about the new reporting process in the coming months. Starting in 2013, Microsoft will include a summary of information from the vendor reports in its annual Citizenship Report. Vendors also will be encouraged to make their reports public. The program will continue to be evaluated in subsequent years to identify options to expand it and provide further visibility to shareholders.

“Microsoft has taken an important step to promote sustainability and transparency among its global suppliers,” Liu said. “If more firms showed such leadership it would hold more suppliers accountable for protecting human and workers’ rights, and reduce the legal and reputational risks that companies and their shareholders face. The New York City Pension Funds are taking this proposal to other companies and expect that they will follow the prudent path Microsoft has chosen.”

As part of the reporting process, Microsoft will also encourage all its suppliers to consider use of the reporting guidelines provided by the Global Reporting Initiative, the leading framework for corporate sustainability reporting based on input from a wide range of civil society organizations, labor, businesses, academics and other experts.

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.