Pearson employs over 32,000 people around the world and our network of suppliers employ many more. We want Pearson to be known as a company that is brave, imaginative and decent. To help guide us, we have our Code of Business Conduct. This outlines the standards we expect not only of our employees, but of everyone connected with our company, including partners and suppliers.

We are also guided by the UN Global Compact's ten principles on labour standards, human rights, business ethics and the environment. Pearson became a founding signatory to the Global Compact at the United Nations in 2000 and served on the Advisory Council.

Our business

We have applied the Global Compact to our own business and created our own set of guidelines on labour standards and human rights which we use to assess and report on our performance. These guidelines are:

• Diversity: We offer equal employment opportunities to all. The people we recruit and promote are selected on merit and suitability, and are not discriminated against because of gender, race, origin, background, religion, marital status, sexual orientation, disability or age.
• Employment conditions: We comply with the relevant laws relating to employment and employment conditions in each country where we operate. We remain committed where such laws are lacking, to introducing our own guidelines. Subject to relevant laws in the countries where we operate, we fully respect the right of our people to freedom of association and representation either through trade unions, works councils, or any other appropriate forum.
• Workplace violence: We are satisfied that we have systems in place to deal with physical and verbal abuse, or the threat of it, and any other form of intimidation within our workforce.
• Exploitation of labour: We recognise that labour standards and conditions may vary from country to country. Pearson companies conduct business in many of the poorer countries of the world where living standards are low. Where Pearson companies directly control their activities in a country, we ensure that our people have satisfactory wages and working conditions, and that there is no exploitation of labour. Working terms take account of local economies.
• Human rights: Our products are produced and manufactured across the world and sold in many countries, often by companies we do not own which are operating on our behalf. In the course of conducting business in 'high risk areas', we are committed to ensure that we are not complicit in human rights abuses and continue to monitor this. If we were to find ourselves inadvertently implicated in human rights abuses, we would take immediate steps to rectify the situation.

In 2001, with the assistance of independent consultants, we put in place a procedure to assess our performance against these guidelines. We carry out an annual survey among our human resources professionals focusing on these guidelines. The 2005 survey covered 90 business operations in 45 countries. Together, the business operations surveyed employ over 30,500 people out of a current universe of over 32,000 employees. The survey report can be found at www.pearson.com/community/progresscommunication.htm

Based on this report, employee feedback to our Code of Business Conduct and our social, environmental and ethical risk assessment processes, we can confirm that we have continued to meet the guidelines we have set ourselves.

Our suppliers

Pearson spends over £2 bn each year with our suppliers. Our most significant categories of supply are:

• Paper
• Production, primarily printing
• Distribution

The majority of our significant suppliers are located in North America and in Western Europe. However, some of our suppliers, particularly those providing print and production services are based in less developed countries. As our Code of Business Conduct and adherence to the Global Compact imply, we have certain principles we expect of all our suppliers wherever they are in the world. Since signing the Global Compact, we have:

• Written to many thousands of our suppliers to advise them of our commitment to the Global Compact.
• Introduced specific contractual commitments relating to labour standards and human rights into our key contracts, particularly those that relate to paper supply, printing and distribution.
• Established an ongoing programme of supplier visits to assess compliance with the Global Compact.
• Worked with the UK book publishing industry to introduce common standards on labour standards and human rights.

In addition to our own programmes, Pearson is a strong supporter of industry co-operation to set common supplier standards. Industry co-operation has the dual advantage of increasing our influence as well as reducing the compliance costs for our supplier partners. This is why Pearson was one of the founding members of Publishers Resolution for Ethical Manufacturing Standards (PRELIMS) in the UK. PRELIMS introduced a common set of standards based on an existing model developed by the toy industry. All signatories commit to work only with printers that sign up to the standards, including an independent audit. In addition to our UK operating companies, our local business, Pearson Education Asia, has also adopted the PRELIMS standard.

We set a number of business targets in this area for 2005. Here is how we performed against them:

Business targets:

Business targets	How we performed
To pilot an initial survey on labour standards and human rights issues for completion by potential new suppliers	Drafted
To carry out an in-depth programme of supplier visits in India focusing on labour standards and human rights issues	Exceeded (visit programmes in India and South Korea)
To include a review of labour standards and human rights issues into commercial supplier visits conducted by members of the purchasing and production teams	Achieved
To consider with the heads of purchasing and production opportunities for further improving how their teams are involved in reviewing performance of suppliers against the Global Compact	Achieved
To continue to work with the UK book publishing industry to promote common standards on labour standards and human rights with suppliers	Achieved

For 2006, our targets in this area are:

• To carry out an in-depth programme of supplier visits in South Africa and parts of Latin America focusing on labour standards and human rights issues.
• To meet our commitment to PRELIMS to only use suppliers who are committed to attain accreditation and meet social accountability standards by January 2007.
• To review the opportunity to extend the work of PRELIMS to our North American operations.
• To consider with the heads of purchasing and production opportunities for further improving how their teams are involved in reviewing performance of suppliers against the Global Compact.

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