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Smith & Nephew believe that working in partnership with suppliers for mutual benefit is the best way to meet our goals. To this end we foster open and ethical relationships with suppliers and pay them in accordance with their agreed terms and conditions. Smith & Nephew expect suppliers to share our social and environmental standards and increasingly require them to demonstrate their commitment to doing so.

The Global Business Units do request information on Health, Safety and Environment policies and practices from their top suppliers. In addition, an initial analysis of country of supply does show that a small number of developing countries provide materials and products to Smith & Nephew and, if appropriate, more information on their activities is requested on social and environmental matters.

We conduct our operations in accordance with generally accepted principles and rules of good governance, and specifically within the listing rules of the London and New York Stock Exchanges.

We aim to provide sustained, profitable growth and a superior return for our shareholders. We provide timely, regular, reliable, and clear information on our activities, structure, financial situation and performance.

We have a comprehensive programme of meetings with our major shareholders in the UK, US and Europe. This provides them with the opportunity to comment on strategy, direction and performance for consideration by the company in future planning. We also meet with shareholding institutions that are interested in investing in Smith & Nephew. New shareholders continue to invest in the company, attracted by our performance and future potential. The executive directors speak at a number of major investor conferences during the year and we stage a series of meetings and presentations to the financial community which we webcast whenever it is practical. The investor section in our website is constantly changing with new and up-to-date information to keep shareholders informed of developments.

Smith & Nephew sees contribution to the communities in which we work as part of our social responsibility and the Group:

• encourages and supports employees at all levels who undertake community work, providing resources (money and materials) and paid time off where business needs allow to participate in projects;
• supports a range of charitable causes (mainly at local level) by donations of money, gifts in kind and employee time;
• is a member of the UK Business in the Community and Disability Forum and we are committed to adopting the principles of corporate community involvement across the whole Group wherever practical;
• is committed to meeting our obligations to government under the law and to accepting and discharging its duties to the community.
• We work with national and local governments and other organisations to meet our legal and civic obligations, manage our impact on the environment and contribute to the development of laws and regulations that affect our business interests.
• We strive to be a good corporate citizen by being an active member of our local communities and by encouraging and supporting employees who undertake community work.

The Group's employment policies are based on equality of opportunity regardless of colour, creed, race, national origin, sex, age, marital status, sexual orientation, mental or physical disability unrelated to the ability of the person to perform the essential functions of the job. Smith & Nephew is committed to the provision of continuous training and development, open communications and rewards that are appropriate to local markets. This approach is clearly demonstrated in the HR Policy Framework which sets out the group-wide HR policies approach to winning high levels of employee engagement and specific policies governing HR practice in the 8 key areas of recruitment, managing performance, remuneration, retirement benefits, talent management, organisation vitality, communications and compliance. In addition the framework clearly articulates our commitment to the values of Performance, Innovation and Trust, our management principles and behaviours. A specific example of this is the development and implementation of the Management Principles that act as a framework for ensuring that the desired management style and behaviours are promoted and implemented across the whole organisation.

These principles are incorporated into the Performance Management processes across the business for managers and form part of the performance assessment process.
We have put a lot of effort into developing our current and future leaders and harnessing their talent to improve the performance of our business. A set of group-wide leadership capabilities have been developed. Senior managers from all parts of the business meet to develop strategies to channel the energy and enthusiasm of the organisation into delivering a culture of superior performance in line with our values. Across our business activities such as use of 360* degree feedback for managers, coaching and attendance at high quality leadership programmes are in place.

In the UK, Smith & Nephew is a founding member of Opportunity 2000 and joined the Disability Forum in 2001. Membership of this organisation provides access to information and expertise that supports our continuing efforts to provide equal opportunities for all employees. In the US Smith & Nephew is an active participant in equal employment opportunity initiatives.

There is a strong Human Resources function in all our businesses, which ensures we continue to deliver on these policies and develop these in line with changing standards. The Group Director of Human Resources is a member of the Group Executive Committee with responsibility for providing functional leadership across the business. Each GBU has an HR Director who is a member of the executive team managing that business. Regular dialogue between the HR groups enables a consistent approach that reflects our core values across the company. There is regular review and audit of processes that are key to successful implementation of these policies as part of the risk management process.

We recognise that each and every one of our employees around the world is key to the continued success of Smith & Nephew and, as such, their feedback, whether through formal job appraisal systems or informally through discussion forums on our Group-wide intranet, is very important to us. Below are some of the ways in which we keep employees informed and seek their views:

• Every two years since 2000, we have carried out a Global Opinion Survey across the business. The aims of the survey were to assess how staff feel about working for Smith & Nephew, determine what we, as a business, do well and identify what could be improved. The survey continues to provide an opportunity to test the effectiveness of Performance, Innovation and Trust as the declared company values.
• Our Global Business Units operate their own intranets as an important element of continuous and interactive communication with employees.
• There is a corporate intranet site available to all employees, concentrating on providing information and services specifically requested by personnel in the businesses. This incorporates the previously available Employee Response Centre that provides employees with the opportunity to address questions to the Chief Executive, other directors and senior managers. Local business intranets sites are also in place across the business providing a mix of information of interest within GBUs as well as Smith & Nephew
• Life, the Group's employee magazine, is printed in English, French, German, Spanish and Japanese. It is distributed to every Smith & Nephew location around the world.
• In addition, individual Global Business Units utilise their own employee communications and consultation processes in order to communicate effectively with employees. We respect and fully support the rights of individuals to freedom of association and the right to collective bargaining where this is the desire of the majority of the employees. We have a number of agreements with recognised trades unions and work in partnership with these groups in consulting and negotiating terms conditions and good working practices. In most of our workplaces, direct communication and consultation with employees is the normal process and this approach is also recognised and fully supported by the local management teams.

The company has worked hard to develop and improve the way it engages employees in taking part in influencing change in the workplace. Individuals and representative bodies are encouraged to give feedback (e.g. Global Opinion Survey), influence the content of solutions (e.g. local focus groups), consultation on specific projects as they arise.

We welcome the involvement of all employees in helping shape the future Smith & Nephew and look to all methods to encourage participation.

Smith & Nephew believe that working in partnership with suppliers for mutual benefit is the best way to meet our goals. To this end we foster open and ethical relationships with suppliers and pay them in accordance with their agreed terms and conditions. Smith & Nephew expect suppliers to share our social and environmental standards and increasingly require them to demonstrate their commitment to doing so.

The Global Business Units do request information on Health, Safety and Environment policies and practices from their top suppliers. In addition, an initial analysis of country of supply does show that a small number of developing countries provide materials and products to Smith & Nephew and, if appropriate, more information on their activities is requested on social and environmental matters.