Supply Chain Study on Corporate Social Responsibility in Global Electronics

Description
It is a joint initiative by the Dutch CSR Platform (MVO Platform) and GoodElectronics. The publication is based on the 2007 CSR Frame of Reference published by the CSR Platform which reflects the Platform's vision on corporate social responsibility. The CSR Frame of Reference describes and defines basic standards and principles and gives an outline of operational principles essential for the implementation of an effective and credible corporate social responsibility policy.


Corporate social responsibility in the global electronics supply chain
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Reset. Corporate social responsibility in the global electronics supply chain 2
Corporate social responsibility in the global electronics supply chain
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Title Reset. Corporate social responsibility in the global electronics supply chain.
Date October 2009
Text GoodElectronics Pauline Overeem & CSR Platform (MVO Platform)
Design Annelies Vlasblom
Editing Elise Reynolds
Photos Chris Gregerson (page 5), International Metalworkers’ Federation/Manfred Vollmer (page 19),
Greenpeace/Kate Davison (page 55), Basel Action Network (page 65), Johan Spanner (page 83)
Printed by PrimaveraQuint
ISBN 9789071284403
Contact details
GoodElectronics and the Dutch CSR Platform are hosted by SOMO
Sarphatistraat 30
1018 GL Amsterdam
Tel +31 (0) 20 6391291
GoodElectronics
[email protected]
www.goodelectronics.org
CSR Platform (MVO Platform)
[email protected]
www.mvoplatform.nl
This publication is fnanced by the Dutch Ministry of Housing, Spatial Planning and the Environment (VROM).
This publication is licensed under the Creative Commons Attribution-Non-Commercial 3.0 Netherlands License. It is possible to
copy, distribute, and display this report and to make derivative works under the following conditions: 1) Attribution. You must give
the original author credit. 2) Non-Commercial. You may not use this work for commercial purposes. For any reuse or distribution,
you must make clear to others the licence terms of this work. Any of these conditions can be waived if you get permission from
the Dutch CSR Platform. To view a copy of the licence, visit http://creativecommons.org/licenses/by-nc/3.0/nl/ or send a letter to
Creative Commons, 171 Second Street, Suite 300, San Francisco, California 94105, US.
Part 1. Introduction 5
Introduction 6
Readers’ guide 8
Basic operational principles 9
The global electronics industry at a glance 17
Part 2. Social aspects 19
Gender 20
Confict commodities 23
Local communities 26
Organising and collective bargaining 28
Forced labour 30
Child Labour 34
Discrimination 36
Security of employment – precarious work 38
Occupational health and safety 40
Working hours 44
Wage 46
Home work 49
Migrant labour 51
Part 3. Environmental aspects 55
Energy 56
Carbon footprint – greenhouse gases 58
Pollution 62
Part 4. Economic aspects 65
Purchasing practices 66
Export Processing Zones 68
Taxation 71
Trade and dumping 75
Marketing and retailing practices 78
Public procurement 81
Part 5. References 83
Table of contents
Part 1.
Introduction
Reset. Corporate social responsibility in the global electronics supply chain 8
T
his publication provides an overview of
CSR issues that are relevant for the global
electronics sector. It is a joint initiative
by the Dutch CSR Platform (MVO Platform) and
GoodElectronics. The publication is based on
the 2007 CSR Frame of Reference published by
the CSR Platform which refects the Platform’s
vision on corporate social responsibility. The CSR
Frame of Reference describes and defnes basic
standards and principles and gives an outline of
operational principles essential for the implemen-
tation of an effective and credible corporate social
responsibility policy.
The CSR Frame of Reference is a general docu-
ment. In this publication the CSR Platform and
GoodElectronics aim to apply the general stand-
ards and principles of the Frame of Reference to
the electronics sector in particular. Several aspects
(social, environmental and economic) in different
phases of the supply chain (mining, manufactur-
ing and disposal) are described from a corporate
social responsibility perspective. This publication
categorises the many problems that the sector
still faces. Progressive initiatives that are relevant
to business, government and civil society are
presented, and concrete recommendations are
formulated. Please note that this publication does
not pretend to be exhaustive. The analyses and
recommendations put forward derive from diverse
civil society sources, including participants to the
CSR Platform and the GoodElectronics network.
Not all views are necessarily shared by all, how-
ever.
Among the most pressing issues is the lack of
freedom of association and collective bargaining.
The lack of observance of these enabling rights
has a huge impact on the labour rights situation
of workers in the global electronics supply chain.
Long working hours, forced overtime and low
wages are no exception. Supply chain responsi-
bility is a key concept when it comes to making
companies deal with issues ranging from sourcing
confict commodities to responsible disposal of
obsolete electronic equipment.
This publication reveals that corporate social
responsibility is not yet part of what compa-
nies in the electronics sector consider as their
core business. Although progress is made on
some aspects, other aspects are not even being
addressed yet.
A renewed and substantially strengthened effort
on corporate social responsibility and accountabil-
ity is urgently needed. Initiatives should be evalu-
ated and improved constantly. A more serious
involvement of civil society stakeholders, unions in
the frst place, is crucial.
The publication is intended for those interested
in a more responsible and sustainable electron-
ics sector: the electronics sector itself, as well as
stakeholders who are working on improving labour
and environmental standards throughout the sec-
tor. Hopefully, anyone interested in the progress in
implementation of corporate social responsibility
in the practice of a globalised complex supply
chains will gain from this information, including
companies in other sectors, policymakers and
consumers who care to know more about the
products they use daily.
Introduction
Part 1. Introduction 9
The Dutch CSR Platform
The Dutch CSR Platform (MVO Platform) is a
network of Dutch civil society organisations and
trade unions that are working together to promote
Corporate Social Responsibility (CSR).
The goal of the CSR Platform is to stimulate,
facilitate and coordinate activities of the different
organisations in order to reinforce each other’s
efforts. The emphasis of the CSR Platform lies on
issues dealing with CSR in developing countries.
GoodElectronics
GoodElectronics is an international network bring-
ing together NGOs, trade unions, labour rights
groups, environmental organisations, academics,
researchers, activists, etc with as common goal to
contribute to sustainability and human rights in the
global electronics sector.
Reset. Corporate social responsibility in the global electronics supply chain 10
T
his publication comprises four parts:
Introduction, Social aspects, Environmen-
tal aspects and Economic aspects. Each
thematic section consists of a number of chapters,
each dealing with its own specifc topic.
In the introductory chapter it is explained how
this publication came about as an initiative of
the Dutch CSR Platform (MVO Platform) and the
GoodElectronics network. In a separate chapter
the basic operational principles that the CSR
Platform and GoodElectronics consider essential
for the implementation of an effective and cred-
ible CSR policy are explained. These essential
principles include supply chain responsibility,
stakeholder involvement, transparency, report-
ing, and complaints procedures. In this chapter
a critical view is taken of the effectiveness of the
codes of conduct currently in use by electronics
companies. Suggestions are also provided of how
companies can further enhance their social and
environmental performance, including investing in
mature industrial relations, worker education and
collaboration among buyers and suppliers. A fnal
introductory chapter provides a brief overview of
the current global electronics industry from a CSR
perspective.
In the global electronics supply chain different
phases can be distinguished. In this publication
we speak of three different phases: the extrac-
tives phase – in which metals used in electronic
products are mined; the production phase – during
which electronic products are assembled and
manufactured; and the disposal phase – during
which redundant or obsolete products are dis-
posed of. Each phase has its own visual symbol.
Extractives Production and Disposal
For each of these three phases, social, envi-
ronmental as well as economic aspects may be
relevant, to varying degrees. Labour issues occur
during each of the three phases.
By Social aspects we mean human rights and
labour rights issues, with a chapter on confict
commodities as well as chapters on organising
and collective bargaining, security of employment,
discrimination and migrant labour, among others.
Gender is discussed as an overarching theme –
linked to the three distinct phases and a number
of topics.
In the part on Environmental aspects, attention is
paid to issues such as climate change, greenhous
gases, and pollution.
The part on Economic aspects deals with issues
such as trade and dumping, taxation and purchas-
ing practices.
Each chapter is made up of four paragraphs:
Issues, Standards, Existing initiatives and Rec-
ommended steps. The frst paragraph presents
the issues inherent to the chapter’s topic. The
paragraph on standards gives the internation-
ally adopted standards and accepted principles
relevant for the topic of the chapter. Progressive
initiatives that are relevant to business, govern-
ment and civil society are presented in the third
paragraph. In the last paragraph concrete recom-
mendations are formulated.
As many issues are interrelated, there are quite
some linkages between the different chapters, in
some cases there may even be a slight overlap.
References of cited works are provided at the end
of the text.
Readers’ Guide
Part 1. Introduction 11
I
n the view of the Dutch CSR Platform (MVO
Platform) and GoodElectronics, there are
a number of general principles which are
essential for the implementation of an effective
and credible CSR policy. This chapter is based on
the 2007 CSR Frame of Reference published by
the CSR Platform as well as the joint vision of the
participants of the CSR Platform on supply chain
responsibility. GoodElectronics is approaching the
electronics industry on the basis of the Com-
mon Demands, a set of principles elaborated and
adopted by the participants of the GoodElectron-
ics network in 2007.
Some elements are derived from recent proposals
by John Ruggie, the Special Representative of the
United Nations Secretary-General on business &
human rights. Also included are recent proposals
by the European Coalition on Corporate Justice
(ECCJ) to improve corporate accountability for
environmental and human rights abuses.
Concrete proposals towards the development and
implementation of codes of conduct, remediation
and complaint procedures were borrowed from the
Clean Clothes Campaign.
The general principles on CSR formulated in this
chapter are put in perspective by linking them to
the current state of affairs in the electronics sector.
The CSR Frame of Reference is based on relevant
internationally agreed standards, agreements,
operating principles and processes. While inter-
national treaties, declarations, guidelines and
covenants primarily defne the social, ecological
and economic responsibilities of governments, it
is clear that they also have a direct and indirect
bearing on companies. A primary normative basis
can be found within the 1948 Universal Declara-
tion on Human Rights (UDHR). In the preamble of
the Declaration, “every organ of society” (which
includes the corporate sector) is called upon
to take “progressive measures” so as to “pro-
mote respect for these rights and freedoms and
secure their universal and effective recognition
and observance”. Two other important standards
should be noted. In the area of labour practices,
the ILO Conventions provide an important norma-
tive basis, while the 1992 Rio Declaration on
Environment and Development has a key role with
regard to the environment.
In addition to the standards and treaties prima-
rily oriented towards governments, international
guidelines and standards that specifcally address
corporate responsibilities have also been devel-
oped. These include the OECD Guidelines for
Multinational Enterprises and the ILO Tripartite
Declaration of Principles concerning Multina-
tional Enterprises and Social Policy. The OECD
Convention on Combating Bribery of Foreign
Public Offcials in International Business Transac-
tions deserves special mention. The International
Organization for Standardization (ISO) is in the
process of developing an International Standard
providing guidelines for social responsibility. This
guidance standard will be published in 2010 as
ISO 26000 and compliance is voluntary. Although
the guidance standard will not include require-
ments and will thus not be a certifcation standard,
it may be a useful tool for companies interested to
improve their CSR performance.
Due diligence and duty of care
An important concept advocated by John Ruggie
concerns due diligence. Due diligence is pre-
sented as a comprehensive, proactive attempt to
uncover human rights risks, actual and potential,
Basic operational principles
Reset. Corporate social responsibility in the global electronics supply chain 12
over the entire life cycle of a project or business
activity, with the aim of avoiding and mitigating
those risks (Ruggie, 2009). Four core elements of
human rights due diligence are:
1 companies having a human rights policy;
2 companies assessing human rights impacts of
company activities;
3 companies integrating those values and fnd-
ings into corporate cultures and management
systems;
4 and companies tracking as well as reporting
performance.
Due diligence comprises reasonable steps by
companies to become aware of, prevent, and
address adverse impacts of their activities and
relationships. These steps may vary depending
on factors such as country context, the nature of
the activity and industry, and the magnitude of
the investment or exchange. Avoiding complicity
is part and parcel of the responsibility to respect
human rights, and entails acting with due diligence
to avoid knowingly contributing to human rights
abuses, whether or not there is a risk of legal
liability. In short, both operating in contexts where
abuses occur and the appearance of beneft-
ing from such abuses should serve as red fags
for companies to ensure that they exercise due
diligence, adapted for the specifc context of their
operations (Ruggie, 2008).
A more stringent approach stipulates that parent
companies should be held liable for the environ-
mental and human rights impacts of their subsidi-
aries and the contractors which they have the right
to control. A company should have a duty of care
to ensure that human rights and the environment
are respected throughout its sphere of responsibil-
ity. Companies should take reasonable steps to
identify and prevent human rights and environ-
mental abuses within their sphere of responsibility.
Large companies should be required to report on
their environmental and human rights impacts and
risks: large companies should have clear stand-
ards to which they report risks and impacts of
their activities within their sphere of responsibility
(ECCJ, 2009).
Supply chain approach
International supply chains are becoming ever
more complex as a result of the
outsourcing of manufacturing and other business
processes. Decisions to outsource activities are
frequently motivated by the desire to save costs
and spread risks. It is precisely for that reason
that companies have to take extra care to avoid
violations of CSR standards in their production
and supply chains. Supply chain responsibility
is a core concept for companies in this respect.
Supply chain responsibility implies that a company
does all it can to enable, promote and implement
responsible business practices throughout its
supply chain. The CSR Platform considers three
positions to be important. Firstly, supply chain
transparency and traceability are relevant. In order
to fesh out supply chain responsibility it is neces-
sary that companies are more open about the ori-
gin of their products and about how they deal with
social problems occurring in their supply chains
(their supply chain management). Secondly, it is
important to promote supply chain responsibility,
which companies are currently taking on voluntar-
ily and on the basis of self-regulation, in order to
make chains more sustainable. Governments and
civil society organisations can stimulate compa-
nies in this respect in a large number of ways.
Thirdly, it is necessary to legally anchor minimum
requirements for supply chain responsibility in
order to be able to tackle abuses and free riders
(supply chain liability).
The notion of supply chain responsibility has only
surfaced in the electronics sector pretty recently.
Sony, for example, has been publishing environ-
mental reports since 1994, but it is only as of
2000 that some electronics companies started
looking at labour conditions in their supply chains
(SOMO, 2009).
GoodElectronics and the Dutch CSR Platform
expressly promote supply chain responsibility
throughout the supply chain, or in other words for
the overall production cycle of electronic equip-
ment, from extractives to production to e-waste
and recycling. Companies should not limit their
Part 1. Introduction 13
supply chain responsibility to the frst tier suppliers
only. At this moment, however, no company fully
agrees with this principle.
Electronics companies are still far from transpar-
ent about their supply chains. A small number of
companies (to date: Fujitsu, Dell and HP) have
published concise lists of their frst tier suppli-
ers. This is a step in the right direction. However,
essential information about the frst tier suppliers
as well as all information about further tier suppli-
ers is not provided.
Electronics companies have been pressured to
recognise their responsibility to extend supply
chain management to include sourcing and min-
ing of metals. Implementation of internationally
accepted environmental, social and labour stand-
ards for achieving best practice in CSR through-
out the supply chain is the key. The electronics
industry as a whole consumes signifcant quanti-
ties of various metals (makeITfair 2008). A number
of individual companies have started to heed this
call. In June 2009, the industry’s sustainability
initiatives EICC and GeSI initiated a Supply Chain
Mapping Project. This research project, commis-
sioned to the American organisation Resolve, will
investigate the supply chain for tin (solder), tanta-
lum (capacitors and deposition targets), and cobalt
(batteries and magnetic recording media) used
in electronics. The purpose of this project is to 1)
create a picture of the electronics supply chain for
these metals; 2) assess suppliers’ use of codes of
conduct addressing social, environmental, health,
and labour issues; and 3) identify the challenges of
collecting this data and consider ways to enhance
and maintain transparency of the supply chain
(Resolve, 2009).
On the other end of the supply chain there are
urgent issues to deal with as well. In accordance
with the principle of Extended Producer Respon-
sibility (EPR) companies are pressured to address
the lifecycle issues of products – especially what
happens to them at the end of their life. In other
words, to develop and implement policies about
how to deal with electronic waste (Greenpeace,
2006). A related concept promoted by Greenpeace
is Individual Producer Responsibility. IPR provides
a feedback loop to the product designers of the
end-of-life costs of treating discarded electronic
products and thus an incentive to design out those
costs (Greenpeace, 2009). Several companies
have started taking initiatives in this feld. In 2008,
GeSI developed an end-of-life management tool
that will be integrated into its existing E-TASC self-
assessment questionnaire for suppliers.
Multi-stakeholder approach
Adopting a multi-stakeholder approach is an
essential condition for a credible and effective
CSR policy. One of the key elements is to identify
all relevant stakeholders and the degree of their
involvement and infuence. Employees, trade
unions, local communities, suppliers, individu-
als, civil society organisations and other relevant
stakeholders should be involved in defning and
implementing CSR policy and participating in
external verifcation of the implementation of CSR
programmes and policies.
In electronics there are no multi-stakeholder
initiatives. Neither do the industry’s sustainability
initiatives engage with stakeholders on a structural
basis. Individual companies as well as EICC and
GeSi have been organising one-off stakeholder
consultations, but generally in a top-down man-
ner. In selected cases of labour rights abuses or
environmental issues companies may have some
contact with civil society organisations. The code
of conduct of the EICC has been unilaterally devel-
oped by its corporate members – no stakeholders
were involved. The same holds true for individual
companies. Credible multi-stakeholder code
initiatives, however, require companies, unions
and NGOs to work together to promote improved
labour practices through code compliance.
Outside the electronics sector, in the garment and
related consumer product sectors, such initiatives
do exist, including the Ethical Trading Initiative in
the UK, the Fair Wear Foundation in the Neth-
erlands, the Fair Labor Association, and Social
Accountability International in the US.
Reset. Corporate social responsibility in the global electronics supply chain 14
Corporate governance
Companies need effective and transparent corpo-
rate governance in order to operate properly
and be trusted to do so by third parties. Corporate
governance brought into alignment with CSR, as
well as other criteria, is a vital condition in this
regard. The company board should ensure that
CSR activities and responsibilities are incorporat-
ed explicitly in corporate policy and that mecha-
nisms and management systems are developed
that are conducive to creating a relationship of
mutual trust between the company and the society
in which it operates. Remuneration of board mem-
bers should be linked to targeted achievements in
the feld of CSR.
Analysis of risks and consequences
Companies should gain an understanding of the
social, environmental and economic conditions in
any given country, region and/or sector in which
they operate. Companies should also analyse
the consequences of their business activities in
the supply chain and/or the community so that
their business operations can fully comply with
CSR standards. Solid analyses of the risks and
consequences of their business practices allow
companies to set priorities and identify which CSR
elements are particularly at risk. This will include
information on how these risks may be avoided, or
what plan may be developed in order to achieve
compliance with these standards within a reason-
able timeframe.
To take into account the consequences of their
business practices throughout the supply chain,
electronics companies should carry out country-
level risk assessments, for each country or region
where they are producing or sourcing from.
Next, efforts to mitigate these risks need to be
undertaken. Public reporting on the risk analysis
as well as the mitigation of risks should be part
and parcel of the process. Some good practices
exist: Apple has formulated clear policy regarding
the recruitment and treatment of migrant work-
ers, on the basis of a focused risk assessment.
Other companies have looked into the situation in
China where independent unions are not allowed,
which undermines the freedom of association and
collective bargaining. To respond to this situation
policies regarding alternative workers’ representa-
tion have been developed.
Developing policy: codes of conduct
and sector-based initiatives
The responsibility assumed for CSR by a company
should be refected in its policy as expressed in a
code of conduct and action plan. In order to avoid
a plethora of codes, each defned by an individual
company, this is best achieved through a cross-
sector approach, in which sector-level or product-
level agreements are made with the entire industry
and in consultation with relevant stakeholders.
A good code meets certain requirements: it should
be comprehensive, meaning that it should apply to
all workers affected by labour practices for which
the company has some measure of responsibil-
ity. This includes all workers employed directly by
the company as well as employees who work in
the company’s supply chain, regardless of their
particular status or relationship to the company.
Women workers, migrant workers, and other
specifc groups of precarious workers should be
explicitly covered. A code should be credible,
meaning it should include all provisions based on
the ILO Core Conventions, the Tripartite Declara-
tion of Principles, as well as other important work-
place issues that are addressed by the Universal
Declaration of Human Rights.
To be a useful tool, the company’s code should be
circulated among its employees and the employ-
ees of its suppliers, the code should be available
to the public on request, and should be accessible
on the company’s website. Efforts should also be
made to ensure that workers are informed and
aware of the code, ideally through explanatory
training courses. The code should, for example,
be posted in a prominent place in the workplace in
Part 1. Introduction 15
the frst language(s) of the workers in the respec-
tive country and copies of the code should also be
made available to the workers who make the com-
pany’s products. It is also important to provide a
picture version of the code for illiterate workers
(Clean Clothes Campaign, 2008).
Some individual company codes set higher stand-
ards – examples are the codes of Apple and HP
which contain stronger worded clauses regarding
freedom of association and collective bargaining
for example.
Implementation: management system,
internal monitoring
The frst step is for companies to monitor their
own practices in order to establish whether these
are consistent with their internal CSR policies,
goals and implementation plans. As is customary
in quality assurance and environmental manage-
ment systems, a CSR management system will
consist of an explicitly defned corporate policy
and processes for ensuring compliance with the
standards. Such a system should also include
self-monitoring processes to ensure that com-
panies themselves can demonstrate whether
and/or to what extent they are acting in line with
the standards introduced, and what corrective
measures they must take in order to eliminate any
non-compliance.
External verifcation
Independent verifcation processes are the fnal
building block of an effective CSR policy. The
quality, usefulness and credibility of a company’s
efforts, as well as the management systems and
processes it has introduced, are strengthened by
independent verifcation of its CSR programme.
The Electronics Industry Citizenship Coalition (EICC) is an industry initiative promoting a code of
conduct for global electronics supply chains to improve working and environmental conditions. The
EICC membership is available to electronics manufacturers, software frms, ICT frms, and manufac-
turing service providers, including contracted frms that design, manufacture, or provide electronic
goods. The EICC code of conduct claims to provide guidelines for performance and compliance with
critical CSR policies. EICC provides tools to audit compliance with the code, and helps companies
report progress.
Global eSustainability Initiative (GeSI) members are companies or organisations that, as a principal
part of their business, provide a service for the point to point transmission of voice, data or mov-
ing images over a fxed, internet, mobile or personal communication network, or are suppliers of
equipment which is an integral component of the communication network infrastructure. GeSI has
deployed initiatives on climate change, supply chain, energy effciency, e-waste and public policy.
About 45 companies, both brand name companies as well as suppliers, have adopted the EICC
code of conduct. Many more have developed their own company code. In some cases the individual
company codes have supplemented the EICC code by adding clauses on labour rights. Still, in most
cases, the above formulated code requirements are not met. The EICC code of conduct falls well
short of what is considered to be the threshold standard for a code of conduct. The EICC code is
not based on international standards such as the ILO conventions, but merely refers to the Universal
Declaration of Human Rights and the Ethical Trading Initiative as its sources. Moreover, the EICC
code does not include full references to the right to organise and bargain collectively and the right
to a living wage. Neither does the code set a clear maximum on normal working hours and overtime
hours (SOMO, May 2009).
Reset. Corporate social responsibility in the global electronics supply chain 16
Independent verifcation is more than a technical
matter merely requiring the involvement of one
or several experts. All those directly involved, for
example the employees or the local community,
should be able to verify the extent to which a
given company’s CSR policy is being implemented
and enforced. Such independent verifcation
should be conducted by an organisation without
links to the company that is trusted by all relevant
stakeholders.
Remediation
An effective monitoring programme is likely to
discover some violations of the company’s code
of conduct and/or local labour law, since few
factories are free of violations. The proper way to
deal with reported non-compliance is not to cut off
relations with the concerned supplier. Companies
should work with factories and stakeholders to
correct identifed problems.
Electronics companies are taking steps towards
establishing monitoring programmes, but generally
speaking this is still far from common practice
in the electronics industry today. In many cases,
the monitoring element merely amounts to buying
companies requesting their suppliers to fll out a
self-assessment questionnaire or to superfcial
visits by the company’s itself. When external veri-
fcation is done, it is often limited to irregular visits
of auditors who provide snapshots of conditions
at the time of their visit – and no indication of the
conditions before or afterwards. These external
auditors are working for commercial frms and
are not necessarily well equipped to engage with
stakeholders. The electronics sector admits that
there is a problem with the quality and credibility
of audits and auditors, especially when it comes to
performing workers’ interviews (EICC, 2009). The
industry sees a solution in training and certifcation
of EICC auditors. There is no mention of inde-
pendent auditing, participation of local stakehold-
ers (NGOs, trade unions) in audits, or off-site
interviews with workers.
Transparency and reporting
Companies are expected to be transparent about
their policy and to report on their CSR perform-
ance. The following are key transparency and
reporting principles:
Reports are relevant, intelligible, accurate, •
complete and balanced. Other important ele-
ments are: adequate explanation, comparabil-
ity over time, comparability with affliated frms
(subsidiaries and suppliers), topicality and
timeliness.
Supply of information, for example back- •
ground information for labels or quality marks
and information made available to the general
public.
Disclosure of data and consultation. •
Right of access to information for stakehold- •
ers, for example consumers, about the origin
and production processes of products and
services.
Some electronics companies make use of the
Global Reporting Initiative guidelines for dis-
closure on economic, social and environmental
performance. In July 2003, the Global Reporting
Initiative released a pilot version of the Telecom-
munications Sector Supplement as an attempt to
provide sustainability reporting guidance to the
telecom sector that is helpful to service providers
and manufacturers alike. This Sector Supplement
covers Internal Operations (specifc practices
related to managing the organisation’s facilities
and infrastructure); Providing Access (approaches
to ensuring equitable access to telecommunica-
tion products and services); and Technology
Applications: (indicators to cover the impacts of
telecommunications products and services). Some
indicators of the Sector Supplement are more
relevant to equipment manufacturers, others are
better applicable to service providers. Since the
telecommunication sector also interfaces with the
wider information technology sectors, some of the
indicators and commentaries may have applica-
tion beyond the telecommunication companies,
according to GRI. The Telecommunications Sector
Part 1. Introduction 17
Supplement was developed through a working
group including industry and stakeholder groups,
including the Global e-Sustainability Initiative
(GeSI).
Complaints procedure
The implementation of a CSR policy will involve
creating channels for complaints from employ-
ees, consumers and other stakeholders, so that
these stakeholders may at all times report alleged
violations of CSR standards. Individuals providing
information on a company’s operations should not
subsequently suffer disciplinary action, discharge
or discrimination. Companies should therefore
have transparent and effective procedures for han-
dling complaints from employees, consumers and
other stakeholders, and they should cooperate
in resolving differences quickly and fairly without
introducing unnecessary costs, charges or other
obstacles. Such complaint mechanisms should be
secure, anonymous, confdential and independent.
Again, some initiatives have been deployed by
individual companies, like setting up hotlines, but
generally speaking effective complaint proce-
dures are non-existent. Among EICC member
companies, establishing hotline and complaints
procedure is still at the pilot-project stage. Where
attempts have been made, it did not rise above
internal complaint procedures, meaning that
hotlines or complaints boxes are managed by the
factory management. The electronics sector has
not yet facilitated independent, external com-
plaints mechanisms. In this scenario a NGO or
a trade union that has the worker’s trust will run
the hotline and will help to establish discussion
mechanisms with the factory management.
In-factory workers education
Workers must be enabled to monitor their own
working conditions and to discuss collective inter-
ests with the management in their factories. This
is especially important in regions and countries
where unionisation is low or where there are no
trade unions. Worker education on labour rights is
a useful tool to this end. Different types of educa-
tion can be distinguished including education on
labour legislation for rank and fle workers, and
training of workers with an interest in representa-
tion and/or trade union offcials, equipping them
to organise and represent workers. To secure
the sustainability of the training programme local
stakeholders should be involved. Trainers neces-
sarily have to be independent from the factory
management and have to relate to the workers’
interests. Worker education can have direct added
value for companies as it makes code imple-
mentation efforts more sustainable. The costs
of supply chain management should reduce as
increased communication between management
and workers helps to solve diffculties on a day-
to-day basis. The need for auditing as well as self-
assessment should therefore be reduced on the
long term. It will help to decrease labour disputes
and wildcat strikes as well as employment turno-
ver. It is important to involve suppliers and buyers:
buyers have a crucial role in motivating suppliers
for worker’s training. Worker’s training can help
increase transparency and quality of the communi-
cation between the supplier and buyer.
Worker’s education remains rare in the electronics
sector. Up to this date, only Hewlett Packard has
made an attempt at facilitating independent work-
er’s training courses. Apple has realised a training
programme in China, but this was characterised
by a top-down approach, without participation of
independent local NGOs.
Collaboration among buyers, suppliers,
NGOs and trade unions on a national or
regional level
Companies should facilitate workplace dialogue
between employer and formal workers’ repre-
sentatives. Additionally, complementary forms of
collaboration among buyers, suppliers and civil
society organisations on a regional or national
level can be set up. Early involvement of brand
Reset. Corporate social responsibility in the global electronics supply chain 18
name companies and suppliers with trade unions
and civil society on a local level is advisable,
before any conficts over labour or environmental
issues occur. Making contact and building trust
among civil society and corporate representatives
is key.
Mature systems of industrial relations –
International framework agreements
Notwithstanding the potential for progress through
involving stakeholders more directly in code
enforcement,which has yet to be fully exercised
in the electronics industry, there are also some
very vocal proponents of an alternative solution;
they claim the code monitoring approach will be
inadequate anyway. Mature Systems of Industrial
Relations (MSIR) are the alternative promoted
as a means to move beyond what are viewed
as ineffective mechanisms of social compliance
(ie, auditing, verifcation and reporting) and to
empower local actors and local labour institutions
in countries where existing systems of indus-
trial relations are weak or absent. Central to this
approach is an understanding that progress in the
advancement of core labour standards in produc-
ing countries needs to surpass the limited impact
(and, businesses would argue, costs) of self-
regulatory mechanisms and be rooted in freedom
of association, dialogue and collective bargaining
(Gregoratti and Miller, 2009). Unfortunately, posi-
tive models of mature industrial relations whereby
electronics workers are members of national
unions and engage in collective bargaining on
wages and conditions with their employer are few
and far between in the sector. The greatest inci-
dence is to be found in the European operations
of European companies where workers are directly
employed: a category of electronics production
employment which is rapidly vanishing (Gregoratti
and Miller, 2009).
Critical elements of an MSIR approach are the
need to rationalise all current codes into one code,
encompassing the ILO core labour standards;
the replacement of social auditing with mature
industrial relations at factory level; and the key role
of effective recognition of freedom of association
and the right to organise as enabling condi-
tions. It is interesting to note also that the ILO’s
guidelines for buyers participating in the Better
Work programme require them to stop company
auditing in areas covered by the programme
and focus on supporting collaborative improve-
ment planning. As the MSIR approach develops
in conjunction with the policy of global unions to
pursue International framework agreements and
to develop relationships between global retailers,
brand-owners and their affliates throughout their
supply chains, it is argued that MSIR needs to be
embraced by suppliers in the sector as much as
by buyers (Holdcroft, 2009).
Part 1. Introduction 19
F
or the purpose of this overview, the term
electronics sector refers to a broad spec-
trum of information and communication
technology companies producing a wide variety of
electronic goods. These goods include comput-
ers, offce equipment, lap tops, mobile phones
and other communications equipment, consumer
electronics (such as mp3-players, webcams and
game consoles), semiconductors (chips), and
miscellaneous electronic components, or in other
words: any product with a circuit board.
At least until the third quarter of 2008, the global
market for electronics products was a strong
growth market. From $1.4 trillion in 2004, the
market has grown at an average rate of about
12.6% per year, to an estimated $2.0 trillion in
2007. October 2007 prognosis expected the
global market to reach approximately $3.2 trillion
by 2012. Industrial products, computer electron-
ics and semiconductors accounts are the key
sectors. However, the current economic crisis is
having its effect on the electronics sector as well,
although it is diffcult to predict how exactly. Some
segments of the market, including the PC market,
are expected to suffer a serious decline. Other
segments, however, are expected to do much bet-
ter, including the sales of notebooks and specifc
segments of the mobile-device market such as
smartphones (BCC Research, 2007).
Historically, the electronics industry has seen
competition between the USA (Silicon Valley) and
Japan. Since its start, the electronics production
base has diversifed. In the Asian-pacifc region,
China, Japan, South Korea, Malaysia, Singapore,
Taiwan and the Philippines are the eight largest
producers of electronics products. Indonesia,
Vietnam and India are on the rise. Outside this
region, Mexico is an important electronics produc-
tion country, as well as several Eastern European
countries including Hungary, Poland and the
Czech Republic.
Electronic equipments are highly complex con-
structions consisting of a wide range of diverse
components. A typical computer, for example,
is made up of an external keyboard, casing and
screen, as well as internal circuitry and wiring
including printed wiring boards (PWBs), semicon-
ductors, hard drives, interface sockets, cables,
etc, many of which are themselves composed of
numerous individual parts. The manufacture of this
type of equipment is a truly global industry.
The electronic products supply chains form an
intricate web, with brand name companies that
have many suppliers, who in turn have multiple
suppliers themselves. These buying companies
may themselves also be component suppliers,
as is the case with Hitachi or ASUS, for example.
Outsourced production of small components for
handsets can stretch into supply chains of nearly a
dozen companies. In total, these complex supply
chains encompass thousands of companies. A
remarkable characteristic of this supply chain is
the uneven distribution of market power, skewed
in favour of the big brand name companies
(SOMO, 2008). 75% of the multi-billion mobile
communications industry is in the hands of just
fve companies (Motorola, SonyEricsson, Nokia,
Samsung and LG) (Consumers International,
2009). A similar picture emerges for the comput-
ing industry, with HP, Dell, Acer, Fujitsu, Lenovo as
well known players.
A related common characteristic of the electron-
ics sector is that production is outsourced, or
subcontracted. Up to 75% of global electronics
production has now been outsourced from Origi-
The global electronics industry
at a glance
Reset. Corporate social responsibility in the global electronics supply chain 20
nal Equipment Manufacturers (OEMs) or brand-
name companies such as Hewlett Packard, Dell
and Apple, to contract manufacturers (CMs) (IMF,
2009). For the mobile phone industry the extent to
which brand companies outsource fnal products
varies between more than 60 percent (Sony Erics-
son) and less than 35 percent (Nokia) (SOMO,
2008). At the level of the contract manufacturers,
there is signifcant market concentration, with
fve major CMs producing electronic products for
all the major brands. These fve are: Flextronics
(Singapore), Foxconn (Hon Hai) (Taiwan), Celestica
(Canada), Sanmina SCI Corporation (USA) and
Jabil Circuit (USA). Despite being for the most
part unknown to the general public, the largest
contract manufacturers are themselves major
multinational companies that have seen extraor-
dinary growth. The current number of hard disk
drive (HDD) suppliers worldwide is reduced to fve
only – Seagate, Western Digital, Hitachi (owns
the former disk manufacturing division of IBM),
Samsung, and Toshiba – which leaves computer
brands little choice.
To a large extent, the components used in the
manufacturing of computers are interchangeable.
Manufacturers do not incur signifcant costs when
switching basic component suppliers. As a result,
supplier power is low (SOMO, 2009).
A major element of the manufacturers’ strat-
egy to attract business from the brand name
companies is to locate in countries where wage
costs are lower, resulting in a virtual race to drive
down labour costs. As competition to take over
manufacturing for the brand name companies has
intensifed, production has moved from countries
that were once considered suffciently low cost,
such as Mexico, to ever cheaper locations (IMF,
2009). Companies in search of lowest production
costs and maximum fexibility are attracted by
Export Processing Zones or Special Economic
Zones established by governments to expand their
comparative advantages over other production
countries.
Despite, or even as a result of the economic
downturn, the electronic products market can
be defned as an aggressive order market, where
demand may change on a daily basis. As a result,
workers at all tiers are expected to be highly fex-
ible, in terms of working hours and overtime.
In terms of consumption, China and India are the
obvious growth markets for electronic (consumer)
goods.
Worldwide this entire sector employs millions of
people, both skilled and unskilled workers. Around
the world there are an estimated 70 million metal-
workers (IMF, 2005).
Generally speaking jobs in the electronics sector
are characterised by low pay, substandard work-
ing conditions, excessive working hours and are
only offered as short-term contracts, often via
employment agencies. The majority of work-
ers engaged in electronics production today are
young women.
This is topped off by a traditional hostility to
unions by the major companies in the sector, low
unionisation levels, and low job security due to the
high numbers of workers who are employed under
temporary contracts, either directly by a company
or through labour agencies.
This has led to abuses, with risks and costs
passed down the supply chain: sub-standard
working conditions and inadequate environmen-
tal standards at some suppliers are tarnishing
the perceived clean image of the industry. The
economic crisis is making things worse: factories
are closing down or are relocated to regions were
labour is cheaper still; regular workers are increas-
ingly replaced by contract workers; more workers
are being hired through labour agencies instead of
directly by producing companies.
Beyond supply chain issues, there are further
unresolved problems relating to the use of sub-
stances which are hazardous to the environment
and human health as well as to systems for taking
back and recycling old appliances, which are often
still inadequate.
Part 2.
Social aspects
Reset. Corporate social responsibility in the global electronics supply chain 22
Issues
Globalisation has led to the feminisation of labour,
especially in export sectors, such as electron-
ics and garments. According to the ILO, women
made up 40.5% of the global labour force in 2008
(ILO, 2009). Women also make up the majority
of informal sector workers. Entering the labour
market has brought women greater economic
independence, greater equality in the household
and personal empowerment. Gender, however,
infuences labour practices in countless ways –
ideas about the jobs women can do, how they
should do them, their wages, their relationship to
employers and the law. It is important to be clear
about the gendered nature of the processes that
underpin the current global industry, as these
processes facilitate rights violations (Clean Clothes
Campaign, 2006). More strongly put, gender dis-
crimination forms the basis for women’s employ-
ment conditions in the global economy. Measures
to improve labour standards that do not challenge
the underlying causes of gender discrimination risk
upholding gender divisions and oppression. This
applies to the formal economy, but is particularly
true for the informal economy.
In most cases, women are the main producers in
the so-called “care” economy – meaning they are
“producing” the bulk of the care for their families,
their households, the elderly, and even in their
communi ties. That in itself already means they
have lives different from those who don’t take on
those (usu ally unpaid) jobs, for example in terms
of the time spent on those tasks, in terms of their
health, etc. (Clean Clothes Campaign, 2006). On
top of this, women are also participating in the
cash economy – performing paid jobs. Being
active, in a labour union for example, is an addi-
tional, often burdensome task.
Women are made to pay the social costs of
fexible labour markets at the expense of their
own health, gender equality and their families’
future prospects. Missing from offcial statistics,
these costs are effectively a hidden subsidy to
the brands in whose supply chains women work
(Oxfam, 2004).
Cultural factors hinder women’s mobility and limit
their access to jobs. In many countries and cul-
tures girls have limited access to education and as
a result are less equipped to apply for higher-level,
better-paid jobs.
Women workers make up the bulk of the labour
force in the global electronics supply chains,
particularly in the manufacturing phase. While
mining is predominantly a man’s job, women are
also amply represented in the disposal phase. In
Gender
Everything from the level of payment and how quickly a worker is paid, to the terms of your job –
such as lack of a contract, no medical or ma ternity leave, no right to organise, or no pension, down
to the way a supervisor speaks to or touches a worker – is informed in part by gender-based notions
of what is acceptable. If you consider what this means in relation to the stress created by job insecu-
rity and by verbal and physical harassment, the malnutrition created by low pay, the exhaus tion that
results from forced overtime, and the inability to do anything about unsafe working practices and
environments, then the roll-out ef fect on a woman’s health and that of her children is immediately
evident (Clean Clothes Campaign, 2006).
Part 2. Social aspects 23
manufacturing, women are often employed on a
temporary and part-time basis. Manufacturing of
electronic products and components predomi-
nantly takes places in special economic zones.
The vast majority of workers employed in such
zones are women; a few years back an estimated
70-90% (GWIT, 2003). Moreover, the labour force
in such zones is to a large extent made up of
migrant workers. Migration is more demanding on
women workers, precisely because of their caring
responsibilities.
Women have a marginal position in trade unions
and institutions dealing with labour policies.
Traditionally, labour unions have a male-dominated
leadership and are not focused on organising
women workers or taking up gender issues.
Worse, trade unions in some cases reproduce
the norms and behaviour that treat women as
a subordinate category (Franck, 2008). Women
regard unions with a scepticism. As freedom
of association is not well protected throughout
electronics supply chains, women workers’ rights
are very poorly protected, particularly in economic
processing zones. Unions are aware of this situ-
ation and are working on it. In 2005, for example,
the International Metalworkers’ Federation Con-
gress made the decision to mandate the inclusion
of women on the IMF Executive Committee.
It is argued that women workers are preferred
because they are seen as a cheap workforce
and perceived as more docile than men. Also
their nimble fngers would make them more ft for
assembly work. Arguably, women are perceived
as more suitable than men for detail work because
they are seen to have ‘natural’ traits, such as
manual dexterity (‘fast fngered women’), patience,
a tendency to be meticulous, and docility (Fox,
2002). These allegedly innate feminine character-
istics are required to manipulate intricate wires
and repeat the same fnite number of tasks all day
(Ferus-Comelo, 2006).
Women workers are discriminated against in many
ways:
Women earn less than men – even for same or •
similar work (ILO, 2008).
In general, women are more likely than men •
to be hired on short-term, seasonal or casual
terms and thus work without the protection
that comes with long-term contracts.
The organisation of work in export-oriented •
manufacturing is not tailored to the lives and
responsibilities of women workers; long work-
ing hours; remuneration below a living wage;
forced overtime; late nights shifts; irregular
working hours and changing shifts, etc. have a
disproportional effect on women.
Women workers receive less training and •
promotion – managers and supervisors are
generally men.
Women are less easily employed after giving •
birth or a starting family. Single women are
preferred over married women.
Specifc benefts for women workers (mater- •
nity leave etc.) are often not well arranged for.
Women sometimes have to undergo forced •
pregnancy tests.
In terms of occupational health and safety, the •
needs of women are insuffciently taken into
account. Often, workers are not allowed to sit
during working hours or to use the bathroom
when needed. From a reproductive health
point of view this is particularly detrimental for
women workers, causing bladder infections
and worsening menstrual pains. For fear of
losing their jobs, women will put off informing
their employer of their pregnancy, with the risk
of working longer hours and further into the
pregnancy than is good for mother and child.
Also, working with chemical substances is
particularly hazardous for pregnant or nursing
workers. In the manufacturing of electronic
equipment as well as during the disposal of
electronic waste, women workers get into
contact with toxic materials, risking a range
of serious health risks such as cancer, miscar-
riage and birth defects (Ladou and Bailar,
2007).
Reset. Corporate social responsibility in the global electronics supply chain 24
Women workers are exposed to intimidation •
and abuse, sometimes with a sexual slant, by
superiors and co-workers, as well as while
travelling between work and home, especially
late at night or early in the morning.
Most codes of conduct do not include gender
aspects. If reference is made to gender issues it is
under ‘non discrimination’; more specifc gender
issues such as childcare and reproductive rights
are not covered. Another limitation of codes of
conduct is that they only apply to the upper tier of
a buyer’s value chain. In this way, a considerable
portion of (women) workers are not reached.
Standards
ILO Discrimination (Employment and Occupa- •
tion) Convention No 111.
ILO Equal Remuneration Convention No 100. •
Existing initiatives
‘Gender equality at the heart of decent work’, •
an ILO Campaign in 2008-2009 on gender
equality and the world of work. Objectives of
the campaign: increase general awareness
and understanding of gender equality issues
in the world of work; highlight the specifc link-
ages between gender equality and securing
decent work for all women and men; promote
the ratifcation and application of key ILO gen-
der equality labour standards; and advocate
the importance of overcoming existing barriers
to gender equality as benefcial for all.
Recommended steps
Comply with all applicable laws, nationally and •
internationally accepted standards on gender
equality, whichever offer greater protection.
Get informed about gender issues and acquire •
an engendered understanding of labour and
social issues throughout the supply chain.
Contribute to the reform and engendering of •
labour standards as well as of company and
industry codes of conduct.
Organisation of code monitoring in an engen- •
dered manner. Make sure audit teams have
a gender balance that matches that of the
workforce.
Fight discriminatory policies and practices that •
put women in a lesser position.
Promote equal opportunities in the workplace •
throughout the supply chain.
Consider affrmative actions to accommo- •
date the specifc position of women workers,
especially in view of their family and care
responsibilities. These could include preferen-
tial transfer of temporary contracts to regular
contracts and the extension of employment
benefts, such as paid maternity leave, annual
leave and sick leave.
Reorganise working hours and shifts to meet •
women’s requirements.
Adjust duties and workload of women during •
pregnancy and breastfeeding.
Allow women workers regular toilet breaks; •
and nursing women workers breast-feeding
breaks.
Ensure workers have access to childcare •
facilities.
Facilitate education for worker’s children. •
Part 2. Social aspects 25
Issues
Wars need money. Natural resources such as tim-
ber, diamonds and minerals play an increasingly
prominent role in providing this money, which is
often used to fund armies and militias who murder,
rape and commit other human rights abuses
against civilians. Global Witness defnes confict
resources as natural resources whose systematic
exploitation and trade in a context of confict con-
tribute to, beneft from or result in the commission
of serious violations of human rights, violations
of international humanitarian law or violations
amounting to crimes under international law.
Companies operating in or sourcing from confict
zones can face a number of specifc human
rights risks. The electronics industry as a whole
consumes signifcant quantities of various metals
sourced from confict areas. Tin (solder), tantalum
(capacitors and deposition targets), cobalt (bat-
teries and magnetic recording media), tungsten
(circuit boards) and gold (motherboard contacts)
are important.
As a result of developing notions on extended
supply chain responsibility beyond the frst or
second tier suppliers, electronics companies are
increasingly acknowledging that the mining phase
is part of their supply chain.
Human rights risks that companies operating in
or sourcing from confict zones should take into
account include:
The expelling of people from their communi- •
ties.
Forced labour and other forms of workers •
exploitation, including child labour.
The handling of questionable assets. •
Illicitly made payments, such as bribes. •
The abusive engagement of security forces. •
The trading of goods in violation of interna- •
tional sanctions.
Allowing the use of company assets for human •
rights abuses.
Directly or indirectly providing the means to kill •
and fnancing international crimes.
Contributing to a climate enabling sexual •
violence against women.
Standards
The Extractive Industries Transparency Initia- •
tive (EITI) sets a global standard for transpar-
ency in oil, gas and mining. The EITI is a coali-
tion of governments, companies, civil society
groups, investors and international organisa-
tions. The EITI is a standard for companies to
Con?ict commodities
Ores mined in the Democratic Republic of Congo include cobalt, (cobaltite), tin (cassiterite), tantalum
(coltan) and tungsten (wolframite), and gold. These resources have fuelled one of Africa’s most brutal
wars and have contributed to grave human rights abuses by Congolese and foreign actors. Politi-
cians, military and militia groups have plundered the country’s natural wealth and used it to enrich
themselves at the detriment of the population. The frequent use of child soldiers and the brutal
sexual violence against women characterise this confict (The Enough Project, 2009). This said, an
overly facile equation of mineral export wealth and war-fghting capacity should be avoided. Reform
of the natural resource sector in the DRC in the sense of ending the trade in natural resources or
bringing it under government control does not equal peacebuilding (Pole Institute, 2009).
Reset. Corporate social responsibility in the global electronics supply chain 26
publish what they pay and for governments
to disclose what they receive. The EITI, in a
nutshell, is a globally developed standard
that promotes revenue transparency at the
local level.
Existing initiatives
makeITfair is a European project focusing •
on the electronics industry, especially on
consumer electronics like mobile phones, lap-
tops and MP3 players. makeITfair publishes
information on the use of metals in computers,
mobile phones and cars, and has released a
List of Principles on the extractive phase of
the electronics supply chain.
In June 2009, EICC-GeSI initiated a Sup- •
ply Chain Mapping Project, in response
to makeITfair campaigning pressure. This
research project lead by Resolve. will
investigate the supply chain for tin, tantalum
and cobalt used in electronics. The purpose
of this project is to create a picture of the
electronics supply chain for these metals;
assess suppliers’ use of codes of conduct
addressing social, environmental, health, and
labour issues; and to identify the challenges
of collecting this data and consider ways to
enhance and maintain transparency of the
supply chain.
Raise Hope for Congo, a campaign by the •
Enough Project, lobbies companies to under-
sign the Confict Minerals Pledge.
Fatal Transactions is an international network •
of NGOs that believe that the natural richness
of Africa, be it gold, diamonds, oil or copper,
can be a motor behind development and sta-
bility instead of a source of confict. Revenues
from natural resources often stimulate or
continue confict and human rights violations
and threaten the just established fragile peace.
In the mean time only companies, some indi-
viduals and corrupt governments proft while
the local population hardly benefts from their
countries’ natural wealth.
Recommended steps
Extend supply chain management to include •
the sourcing and mining of metals. Electron-
ics companies should create a tracing system
paired with credible monitoring of the system
by independent third parties.
Demonstrate, with credible written evidence, •
the exact origin of mineral supplies, the routes
they have taken and the identity of those
involved in the chain of custody, including
intermediaries or third parties who have han-
dled them.
When sourcing from confict or high-risk •
zones, exercise stringent due diligence regard-
ing mineral suppliers. Companies should fnd
out exactly where the minerals were produced
(not only the broad geographical area, but
the precise location and mine), by whom they
were produced and under what conditions
(including use of forced labour, child labour,
health and safety and other labour conditions)
(Global Witness).
Refuse to buy minerals if such information is •
not available or if there are indications that the
minerals have passed through the hands of
In August 2008, the UK trading company Afrimex was condemned for breaking the OECD Guide-
lines by sourcing minerals from a Congolese war zone. In the Afrimex case, the UK National Contact
Point (NCP) – the British government body which considers complaints brought under the OECD
Guidelines for Multinational Enterprises – affrmed that Afrimex initiated demand for minerals from a
confict zone and used suppliers who had made payments to RCD-Goma. It concluded that Afrimex
had failed to contribute to sustainable development in the region and to respect human rights. The
NCP also stated that Afrimex applied insuffcient due diligence to the supply chain, sourcing minerals
from mines that used child and forced labour (Global Witness, 2008).
Part 2. Social aspects 27
warring parties, benefted them in other ways,
or otherwise involved human rights abuses.
In extreme situations, consider a ban on •
sourcing from confict areas where there is
a likelihood of money or services directly or
indirectly supporting rebel groups or state
actors committing war crimes and other seri-
ous human rights abuses (Global Witness,
makeITfair).
Work to make the trade in minerals from con- •
fict zones more transparent, thereby assist-
ing the formalisation of the sector (Resource
Consulting Service). This would also beneft
artisanal miners.
Address resource-related conficts in a way •
that tackles their particular character: in other
words, by proactively addressing the trade
that underlies the war, as well as the war itself.
Ensure investment in the natural resource sec- •
tor is equitable, sustainable, transparent and
non-corrupt, and brings long-term beneft to
the state and the population, thereby helping
to prevent the seeds of future confict (Global
Witness). Support livelihoods and economic
opportunities for miners, including artisanal
miners (Enough Project).
Call for a public statement of concern •
denouncing the injustices occurring at the
extractive phase (makeITfair).
Positively contribute to reforming international •
policy, especially pushing for the international
community, at UN level, to adopt a defnition
of confict resources which could be used to
trigger action to prevent natural resources
from fuelling confict, and which could form
the basis of revised national laws allowing
people who trade in confict resources to be
prosecuted (Global Witness).
Reset. Corporate social responsibility in the global electronics supply chain 28
Issues
Companies have an enormous impact on the
rights of individuals and communities. Allegations
of human rights abuse are particularly high in the
extractive industry. Mining sites are often estab-
lished in rural areas where people live and work.
Also, manufacturing facilities as well as e-waste
dismantling sites or dumping grounds are often
set up in the close vicinity of human settlements.
The rights and livelihoods of local communities are
not necessarily well served with the introduction of
such economic activities. Communities have been
forcibly removed from their lands to make way for
extractive or manufacturing activities. The social
and environmental impact of mining, but also of
manufacturing and irresponsible e-waste disposal
on local communities can be most disrupting.
Agricultural felds, forests and sources of water are
destroyed by contamination, pollution or overuse.
Often it concerns marginalised peoples, including
in some cases indigenous peoples, with very inad-
equate access to social services, including poor
access to justice. Land rights of (indigenous) peo-
ple have been violated, their ancestral domains
not being well protected. As a result, traditional
livelihoods are endangered.
Moreover, the arrival of well-resourced companies
seeking to win over local communities can also
lead to increased violence and social confict, as
some people are excluded from the benefts of
economic development. This can be exacerbated
by the lack of transparency in the way companies
award community contracts and payments. Affect-
ed communities are frequently denied access to
information about the impact of company opera-
tions and excluded from participating in decisions
that affect their lives, increasing insecurity and
deprivation. When human rights abuses do occur,
governments cannot or will not hold companies
to account. States have privatised many state
services including the right to education, health,
and water. However, states often fail to ensure that
companies deliver these services without discrimi-
nation (Amnesty International, 2009).
In the case of large scale mining operations, small
scale artisanal miners are often obliged to make
way. Military and paramilitary oppression by state
and private forces, acting on behalf of mining
companies, is a serious issue. It happens that
mining laws are changed to accommodate the
interests of mining companies, while protocols
protecting indigenous peoples and the environ-
ment continue to be diluted (Mines and Communi-
ties, 2008).
Local communities
In 1959, the Dutch manufacturing giant Philips Electronics set up a manufacturing plant in Pamplona,
Las Piñas, in the Philippines, to produce light bulbs and (later) consumer electronics. The factory
was closed in 1995 but 12 years later residents living in communities around the Philips plant were
shocked to learn that the water in their wells was contaminated. Philips admitted to using a highly
toxic chemical known as TCE, (trichloroethylene), a solvent used mainly to remove grease from
metal parts at the Las Piñas plant. The use of TCE, a highly toxic chemical linked to cancer and other
serious health effects, was banned globally under the Montreal Protocol in the early 1990s. Two
years after the initial disclosure of TCE contamination, the residents of the affected areas still do
not have a clear picture of the extent and impact of the contamination, reports the Philippines NGO
Kaisampalad.
Part 2. Social aspects 29
Standards
United Nations Declaration on the rights of •
indigenous peoples.
ILO Indigenous and Tribal Peoples in Inde- •
pendent Countries Convention No 169.
A key element of both the UN Declaration and the
ILO Convention is the principle of free, prior and
informed consent of indigenous peoples for com-
panies to start their operations. This form of con-
sent requires the participation of indigenous peo-
ples at all stages in the decision making, planning,
implementation, and evaluation of any activity that
affects their rights and interests. Their consent
must be sought and obtained without recourse to
coercion. The process of obtaining consent must
allow suffcient time for all concerned to learn
about the process, obtain information, engage
in full discussion, and reach an agreement. All
relevant information must be made available to the
community. Consent must be clearly demonstrat-
ed, in keeping with the decision making structures
of the indigenous peoples involved
Existing initiatives
Mines and Communities exposes the social, •
economic, and environmental impacts of
mining, particularly as they affect indigenous
and land-based peoples. The organisations
and individuals behind Mines and Communi-
ties demand far greater accountability and
transparency on the part of the minerals’
industry. The key demands are encapsulated
in The London Mining Declaration, originally
launched in 2001 and revised in 2008.
Recommended steps
Comply with all applicable laws, nationally and •
internationally accepted standards on commu-
nity rights, whichever offer greater protection.
Apply the principle of free, prior and informed •
consent to all communities that are likely to be
affected by business operations.
Refrain from operating in places where com- •
munities are opposed to corporate presence.
In this sense ‘community consent’ may be
a stronger norm than the increasingly heard
phrase ‘social license to operate’.
Where applicable, ensure that an agreement •
is reached with communities on just and fair
compensation of losses suffered.
Where possible, ensure that communities are •
offered the option of return.
Contribute to putting in place a system of •
regulation that ensures redress for those
affected and prevents the pursuit of proft at
the expense of human rights.
Inclusion of such standards and principles in •
company or industry codes of conduct that
cover the entire supply chain.
The Bushveld Igneous Complex is an important reservoir of platinum group metals in South Africa.
The company Anglo Platinum is operating a mine in Potgietersrust, in the Northern Limb of this
region. To allow for an intended output increase to approximately 12,190 kilograms per annum, Anglo
Platinum required the resettlement of three local villages with a total population of 17,000 people. In
2001, the village of Ga Pila was removed. The villagers are now living in poor conditions at a nearby
farm. According to a South African NGO: “Ga Pila residents were subjected to forced removals like
those in the time of apartheid”. The people of the two other villages, Ga Puka and Ga Sehaolelo, have
continued their protest against the planned removal by Anglo Platinum (SOMO, 2007).
Reset. Corporate social responsibility in the global electronics supply chain 30
Issues
The global electronics sector provides millions
of jobs, mainly in developing countries. Whereas
electronics production falls largely within the
formal economy, informalisation is undermining
compliance to labour standards. Equally, employ-
ment in the informal economy – such as the min-
ing of metals used in electronic equipment and the
disposal of electronic waste - is mainly precarious.
Both formal and informal workers are in the main
unorganised; the levels of unionisation in the elec-
tronics industry are very low.
The very nature of precarious employment consti-
tutes an obstacle to electronics workers exercising
their right to freedom of association, for the same
reasons that such workers the world over remain
un-unionised: temporary workers have no guaran-
tee of remaining in the workplace for an extended
period (although many in fact do); agency workers
have an indirect employment relationship with
the company they work for; legislation or union
statutes prevent contract workers from joining the
same unions as the permanent workforce; unions
fnd it hard to make contact with such workers
who are likely to be on different pay and condi-
tions from the permanent workforce; and of course
the biggest barrier of all: workers’ fear of loss of
current or future employment.
Freedom of association and collective bargaining
are known as enabling rights, because they give
workers tools to monitor their own workplace and
to negotiate with management on the improve-
ment of working conditions. This standard is
routinely denied in both law and practice.
It is also one of the most diffcult human rights
standards to monitor.
Discrimination of workers who openly join a union
or attend union activities is frequently observed.
Workers are subject to dismissal, discrimination,
harassment, intimidation or retaliation because
they join a trade union or participate in trade union
activities.
As a consequence, workers are unable to defend
their rights and interests. Flexible, insecure, infor-
mal, precarious and migrant workers have very
limited possibilities for collective action or power
to negotiate with employers. Notably, women
workers are overrepresented in these categories.
Dialogue between companies and organised
labour is all but absent at national and interna-
tional levels. Additional factors are the structure
and complexity of electronics supply chains. The
main barrier to organising and collective bargain-
ing is the traditional hostility towards unions on
the part of the major companies in the electronics
sector. Precarious employment practices are intro-
duced precisely to prevent workers unionising.
The assumption seems to persist that admitting a
trade union will lead to business closures.
Standards
ILO Freedom of Association and Protection •
of the Right to Organise Convention No 87.
ILO Right to Organise and Collective Bargain- •
ing Convention No 98.
ILO Workers’ Representatives Convention •
No 135.
ILO Declaration on Fundamental Principles •
and Rights at Work.
Organising and collective
bargaining
Part 2. Social aspects 31
Existing initiatives
ILO Better Work Programme, a partnership •
with the International Finance Corporation.
The main aim of Better Work is to improve
labour standards in global supply chains.
Recommended steps
Comply with all applicable laws, nationally •
and internationally accepted standards and
industry standards on organising and collec-
tive bargaining, whichever offer worker greater
protection.
Inclusion of such standards and principles in •
company or industry codes of conduct that
cover the entire supply chain.
Write freedom of association and the right •
to organise and bargain collectively into the
contract between buyer and suppliers.
Enhance a positive corporate understanding of •
social dialogue and the role and the activities
of trade unions.
Make use of social dialogue to improve work- •
ing conditions in the electronics sector.
Facilitate capacity building of trade unions and •
employers throughout the supply chain for
meaningful social dialogue at plant level, as
well as at national and international level.
Support the ILO’s Better Work Programme. •
When sourcing from a country where freedom •
of association and collective bargaining are
restricted by law (eg, China), take specifc
steps to encourage decent working condi-
tions.
Adopt and post a “Freedom of Association •
Policy” for all facilities. This policy should be
read aloud to all employees at least once (for
example, by a supervisor during a morning
meeting) and it should be posted in the local
languages within easy view in several popular
locations around the factory grounds.
Do not assist, inhibit, or interfere in any way •
with the formation of a union.
Refrain from forming an employee committee •
or joint labour-management committee in such
a manner that it undermines the role of any
duly registered union at that factory.
Refrain from intimidation, harassment, demo- •
tion, transfer, promotion, or termination of
workers based on their association with a
union.
Refrain from discriminating between or •
express favouritism to one union or another,
especially at factories where there is more
than one legally registered union.
Provide opportunities for unions to dissemi- •
nate information regarding freedom of asso-
ciation and unions (such as billboard space
for posting information or a space near the
factory entrance or exit where information can
be distributed).
Assist with dues check-off if a union requests •
it. If there is more than one union present at a
factory where check-off is taking place, and
if one or more of those unions alleges that
the records management is using to manage
the check-off process do not refect workers’
free choice, then there should be a verifcation
process to ensure that workers have freely
authorised the union and management to
deduct dues from their wages. This process of
verifcation needs to be independent, transpar-
ent and credible.
If a union forms, enter into good faith negotia- •
tions for a collective bargaining agreement. If
a factory has more than one union the legal
obligation of management is only to negoti-
ate with the majority union, but management
should make every effort to consider the
minority union’s opinion as well.
Moves to trim production methods should not •
intensify pressure on workers or contribute to
undermining freedom of association and col-
lective bargaining agreements.
Reset. Corporate social responsibility in the global electronics supply chain 32
Issues
Globalisation and the growing links across
countries and frms have raised forced labour and
traffcking in persons as signifcant issues within
global supply chains. Forced labour and human
traffcking are truly global phenomena, affecting
all countries in the world today. Forced labour is
defned as all work or service which is exacted
from any person under the menace of a penalty
and which the person has not entered into of his
or her own free will. It occurs where work is forced
by the state or by private enterprises or individuals
who have the will and power to impose on workers
severe deprivations, such as physical violence or
sexual abuse. Forced labour can include practices
such as restricting people’s movement; withhold-
ing wages or identity documents to force them to
stay on the job; or entangling them in fraudulent
debt from which they cannot escape. Forced
labour is a criminal offence and a violation of
fundamental human rights.
Some signs pointing at the possibility of forced
labour are:
Indebted workers. Workers who are or may •
become indebted can become coerced into
working for a particular employer to repay the
debt.
Prison labour. Use of prison labour is not •
necessarily forced labour. However, prisoner
workers should be hired to companies only on
a voluntary basis, and conditions with regard
to wages, benefts and occupational safety
and health should be comparable to condi-
tions for free workers.
Exploitative practices such as forced overtime •
or the lodging of deposits (fnancial or per-
sonal documents) for employment.
Migrant workers are particularly vulnerable to •
forced labour.
Workers working without a contract, who are •
more likely to not know their rights, including
their right to leave their employment.
These phenomena are not uncommon to the
global electronics supply chain. In the extractives
phase, in particular in confict areas, forced labour
is frequently observed. Prisoners, villagers held
hostage by rebel groups, impoverished farmers,
are among the groups of miners that are involved
in the mining of metals used in electronic equip-
ment. In the production phase it frequently hap-
pens that the fear of dismissal drives employees to
work overtime beyond what is allowed by national
law. In other cases, workers may feel obliged to
work above the legal maximum because this is
the only way they can earn the minimum wage
(for example, where remuneration is based on
productivity targets). In these cases, although
workers may in theory be able to refuse to work,
their vulnerability may mean that they have no
choice and are therefore obliged to do so in order
to earn the minimum wage or keep their jobs, or
both. This then becomes a situation of imposing
work under the menace of a penalty and can, thus,
be considered forced labour (ILO, 2008).
Forced labour
Part 2. Social aspects 33
This case study focuses on allegations of forced labour in factories in China and on the actions taken
in response by one major US electronics company. The factories in question were owned by two dif-
ferent companies and both were assembling separate products for the US multinational. One factory
in particular attracted greater criticism in the media. The descriptions of working conditions ranged
from workers who were forced to work very long hours, live in cramped and insuffcient accommo-
dation, forced to pay for accommodation and food, and prevented from leaving the facility. In addi-
tion, there were allegations of child labour in the manufacture of some products, and use of discipli-
nary actions which involved workers being made to stand still for long periods. The allegations frst
appeared in a report which was not available on the Internet but which included some pictures of
factory conditions that were later reproduced in the international press. The story was frst published
by a UK paper and then, shortly afterwards, by a business journal in China.
Business responses to the issue
The US company in question responded with a statement within 3 days of the above-mentioned
allegations. It stated that the company was taking steps to investigate the situation and that it took
the allegations seriously. The US company took steps to investigate the allegations through exten-
sive factory visits and worker interviews. It published a report on its website within six weeks of the
initial media coverage. In the report, the company states that an audit team sent to the factory was
made up of staff from its human resources, operations and legal departments, and that the evidence
gathered was cross-checked against many sources of information from employees, manage-
ment and staff records. It also points out that, in auditing for forced labour, security records were
checked to look for false identifcation papers. The report goes on to summarize fndings related to
the working and living environment, compensation, overtime, and worker treatment. Although the
company report states that there was no evidence of forced labour or child labour, it made public
the observation that the company’s own weekly limit on hours worked, as stated in the company’s
code of conduct, was being exceeded. The company stated that, as a result of its fndings, the sup-
plier was changing its policy to ensure compliance with the weekly overtime limits. In addition, the
company noted that improvements to the sleeping facilities were required but that the supplier was
in the process of acquiring more land to build further facilities. The supplier in question was quoted
as having opened the factory to its customer and provided access for the audits to take place. It
is noteworthy that this supplier is a signifcant company in the industry and has grown rapidly in
recent years. The supplier was quoted as being satisfed that the US company’s report cleared up
the allegations about working conditions in their factory. It is also quoted as saying that the incident
resulted in the company refecting on being more open about its business than it had previously
been. It is interesting to note that the Business and Human Rights Resource Centre, which has a
policy of requesting responses from companies cited in human rights abuse allegations, records this
particular case in its summary as having been resolved prior to the company responding. It is the
only case which appears with this indicator.
Initial lessons from the issue
The US company in question was using around 15% of the total workers employed by the factory
in China. The same factory was being used by other major high street electronics brands although
there is little mention of these companies’ reactions to the story. Nevertheless, this percentage share
did not limit the access the company had in producing its audit fndings. The story also highlighted
the Electronics Industry Code of Conduct, a sector-specifc tool and initiative which brings together
over 40 (as of September 2008) companies working in the electronics industry. This initiative is aimed
at improving working conditions in the industry supply chain. At the time the story was published, the
Reset. Corporate social responsibility in the global electronics supply chain 34
Standards
ILO Declaration on Fundamental Principles •
and Rights at Work.
ILO Forced Labour Convention No 29. •
ILO Abolition of Forced Labour Convention •
No 105.
ILO Private Employment Agencies Convention •
No 181.
Existing initiatives
The ILO Special Action Programme against •
Forced Labour has released a series of recom-
mendations to strengthen employers’ activities
against forced labour.
Recommended steps
Comply with all applicable laws, nationally and •
internationally accepted standards on forced
labour, whichever offer greater protection.
Develop company policies to act as guidelines •
on recruiting (migrant) workers. Clarify that
the policy applies to all entities involved in a
company’s product and supply chains.
Have a clear and transparent company policy, •
setting out the measures taken to prevent
forced labour and traffcking. Train auditors,
human resource and compliance offcers in
means to identify forced labour in practice,
and seek appropriate remedies.
Ensure that all workers have written contracts, •
in language that they can easily understand,
specifying their rights with regard to payment
of wages, overtime, retention of identity docu-
ments, and other issues related to preventing
forced labour.
Ensure wages are paid regularly and methods •
of payment are prohibited that deprive work-
ers of the genuine possibility of terminating
employment. Wage payments shall not be
delayed or deferred such that wage arrears
accumulate. Wages shall be paid directly to
the worker and should be paid in legal tender,
or by cheque or money order where permit-
ted by law, collective agreement or with the
consent of the worker. Payment in the form
of vouchers, coupons or promissory notes is
prohibited.
China-based supplier was a member of the EICC but the US company was not. However, in its report
detailing the audit and its fndings, the latter indicated that it would be joining the EICC. Shortly after
the publication of the company report, a related human rights issue was highlighted by the interna-
tional media, involving the journalists who had initially published the story in the British and Chinese
press. A wholly-owned subsidiary of the subcontractor based in China took legal action on grounds
of defamation against the journalists in their own personal capacity. The lawsuit demanded a large
sum of money and once the court accepted the case, the journalists’ assets were frozen. The paper
in question stood by its journalists and criticised the action being brought. There followed requests
from press freedom NGOs to both the supplier and to the US company asking them to act so that the
case could be dropped. The US company said that it was working behind the scenes to help solve
the issue. The case was dropped shortly thereafter. This case demonstrates that by acting quickly
and being thorough in their response, the company quelled concern about the particular working
conditions involved in the manufacture of key products. In addition, when the story took a different
turn and moved into the sensitive political feld of press freedom, it seems that the company was
prepared to remain involved. Nevertheless, the case highlights the diffculties in ensuring compliance
with company codes in situations where there is extensive outsourcing. The US company’s decision
to join the EICC demonstrates again the added value of working in cooperation with other compa-
nies facing similar diffculties which may be seen as endemic to the industry (ILO, 2008).
Part 2. Social aspects 35
Establish a company policy on overtime that •
clearly states it will only be undertaken vol-
untarily. Train human resource personnel and
supervisors on this policy. See to it that work
or service outside normal daily working hours
shall not be imposed by exploiting a worker’s
vulnerability under the menace of a penalty.
Use only recruitment agencies that are •
licensed or certifed by a competent authority.
Ensure that private employment agencies do •
not engage in fraudulent practices that place
(migrant) workers at risk of forced labour and
traffcking for labour exploitation.
Ensure that fees or costs related to recruit- •
ment are not borne by workers but by the
contracting company.
Promote agreements and codes of conduct by •
industrial sector, identifying the areas where
there is risk of forced labour, and take appro-
priate remedial measures.
Contribute to programmes and projects to •
assist, through vocational training and other
appropriate measures, the victims of forced
labour and traffcking.
Build bridges between governments, work- •
ers, law enforcement agencies and labour
inspectorates, promoting cooperation in action
against forced labour and traffcking.
Address the root causes that can lead to per- •
sistent use of overtime; for example, consult
with buyers on questions related to production
requirements and deadlines.
Reset. Corporate social responsibility in the global electronics supply chain 36
Issues
In developing countries one often sees children
working. Some of these children might do their
work proudly, others are little more than slaves.
But what all of them have in common is that they
are missing out on education and time to play.
Child labour is not just a consequence of the
low wages of parents. In fact, children working
depresses the wages and employment opportuni-
ties of their parents. A child who spends even part
of the day working, instead of going to school,
remains under-educated or uneducated and
is condemned to badly paid jobs. Companies
increasingly seek well educated employ ees and
will not invest in countries where the population is
lacking even the most basic educational qualifca-
tions. Children’s rights are human rights. Children
have the right to be free from child labour and
the right to education. But rights also imply that
others have duties. Companies have obligations
to contribute to the realisation of internationally-
recognised rights (Stop Child Labour, 2008).
Child labour is found throughout the global
electronics supply chain, especially in the mining
and disposal phases. In manufacturing, child
labour may not seem to be a widespread problem,
although production workers as young as 15
years old have been spotted. Children partake
in the mining of metal used in electronic equip-
ment, for example in cobalt, tin and coltan mines
in the Democratic Republic of Congo. Children
work in the electronic waste disposal, for example
in Ghana and China. The working conditions in
these sectors are most appalling, even more so for
children.

Standards
UN Convention on the Rights of the Child. •
ILO Minimum Age Convention No 138. •
ILO Worst Forms of Child Labour Convention •
No 182.
Existing initiatives
Stop child labour – School is the best place •
to work. The Stop Child Labour campaign is a
joint lobby, education and awareness raising
campaign that seeks to eliminate child labour
through the provision of full time formal educa-
tion. The Stop Child Labour campaign has
developed an action plan for companies to
combat child labour.
The International Finance Corporation (IFC) is •
a unit of the World Bank that provides project
advice and funding to companies - typically
for major projects. The IFC has developed an
extensive policy on CSR and also provides
advice on the implementation of fundamental
labour standards including child labour. In
its 20-page Good Practice Note ‘Address-
ing Child Labor in the Workplace and Supply
Chain’, the IFC spells out several recommen-
dations for combating the ‘harmful’ types of
child labour.
Recommended steps
Comply with all applicable laws, nationally and •
internationally accepted standards on child
labour, whichever offer greater protection.
Make explicit in policies and codes of conduct •
that all forms of child labour prohibited by
the two ILO Conventions (138 and 182) will
Child labour
Part 2. Social aspects 37
be proactively prevented and, if nevertheless
found, be combated and eliminated.
Make explicit in contracts with suppliers that •
they must eradicate child labour and realise
labour rights across all sub-contracted opera-
tions.
Ensure that children hitherto employed at the •
company’s own plants or service operations,
and/or in out-sourced or sub-contracted
operations across the entire supply chain, are
transferred to free, full-time regular education.
Make sure that young people aged 15 to 18, •
who are allowed to work according to inter-
national agreements, are not engaged in the
worst forms of child labour as specifed in ILO
Convention 182. At least comply with agree-
ments - required by the Convention - between
governments, labour unions and industry
umbrella associations on hazardous, danger-
ous work.
Involve staff and suppliers in combating child •
labour: inform them and involve them in the
company’s action plan against child labour.
Collaborate and team up with other segments •
of society, for example local and/or national
governments, to achieve full-time schooling
for former child labourers up to the age at
which they are allowed to work under Conven-
tion 138 or national law.
Make a special effort where needed to •
address the specifc challenges faced by chil-
dren from groups suffering discrimination and
other marginalised groups so that they too can
make the transition from work to school.
Verify the authenticity of birth certifcates and •
lobby jointly with other parties for the estab-
lishment of reliable birth registration systems
in areas where these are absent.
Combating child labour must always go hand •
in hand with compliance with the ILO’s other
core labour standards and other broadly
agreed workers’ rights.
Work with trade unions both to tackle child •
labour and to make sure that labour rights are
implemented.
Pay a procurement price to suppliers enabling •
them to avoid using child labour and to
employ adults (or youngsters older than 14
or 15) instead, offering them decent pay and
conditions. If needed, also adjust other ele-
ments of the company’s sourcing policy with a
view to implementing the company’s ‘no child
labour’ policy and ensuring that fundamental
workers’ rights are complied with.
Whenever possible, try to transfer the job hith- •
erto done by children to their parents or other
close relatives, or offer the parents alternative
suitable employment.
Create, independently or working with others, •
facilities such as crèches and daycare centres
for employees, to help them keep their chil-
dren out of the child labour market.
Invest in a credible management system to •
combat child labour. This includes: pro-active
investigations into child labour in the sup-
ply chain, a solid self-monitoring system
and complaints mechanism, reporting and
transparency on policy and practice, third-
party monitoring and verifcation, and involving
those directly concerned and/or affected.
Reset. Corporate social responsibility in the global electronics supply chain 38
Issues
ILO Convention 111 defnes discrimination in
respect to work and employment as ‘any distinc-
tion, exclusion or preference made on the basis
of race, colour, sex, religion, political opinion,
national extraction or social origin, which has the
effect of nullifying or impairing equality of oppor-
tunity or treatment in employment or occupation’.
The UN Global Compact further defnes discrimi-
nation in employment and occupation as “treating
people differently or less favourably because of
characteristics that are not related to their merit
or the inherent requirements of the job. These
characteristics commonly include: in the national
law, race, colour, sex, religion, political opinion,
national extraction, social origin, age, disability,
HIV/AIDS status, trade union membership, and
sexual orientation.’ It is agreed that all workers
should enjoy equal rights. Yet workers throughout
the world continue to be subject to discrimination.
In the global electronics sector discrimination is an
issue too.
Women, migrants and young workers are often
subject of discriminatory policies and practices.
Gender and migrant labour issues are described in
separate chapters. Other forms of discrimination
that occur in electronics manufacturing include
discrimination of the basis of age and marital
status. Young workers are preferred above mar-
ried people. The bulk of the labour force is made
up of young, single women. A serious form of
discrimination concerns the unequal treatment of
trade union members. When applying for a job,
workers are interrogated about their trade union
sympathies and actively discouraged to join a
trade union. Membership is too often a reason for
harassment or even dismissal. In the mining and
disposal phases, the effects of societal discrimina-
Discrimination
A very specifc form of discrimination concerns caste-based discrimination. Caste-based discrimina-
tion is a form of discrimination, prohibited by international human rights law, that globally subjects
an estimated 260 million people to discrimination on the grounds of work and descent. This form
of discrimination is an entrenched human rights violation, which is mainly found in South Asian
countries but also occurs in communities in Japan, Yemen, some African countries and Diaspora
communities. Victims suffer a hidden apartheid of segregation, modern-day slavery and other forms
of discrimination as a result of having been born into a marginalized group or caste. Caste discrimi-
nation constitutes one of the most serious and widespread global human rights challenges today,
affecting large proportions of societies in many regions of the world, and continues to function as
a deeply rooted system of grave human rights violations. Caste-based discrimination includes dis-
crimination in employment where people affected often serve in low level positions and suffer from
both open and ‘hidden’ discrimination, drastically affecting their ability to amass and provide for their
families. The number of foreign companies operating in and sourcing from India and other South
Asian counties is increasing, and the majority of these companies will have limited knowledge of the
scope and dynamics of caste-based discrimination. An intrinsic element of South-Asian and other
societies, caste-based discrimination and exclusion is often invisible to the outsider. As a conse-
quence, companies may unknowingly contribute to and beneft from caste-based discrimination and
exploitation (IDSN 2009). That goes for electronics companies too.
Part 2. Social aspects 39
tion and exclusion are also visible. It is generally
the people with less chances on the labour market
that end up in the lower strata of the informal sec-
tor, doing unskilled, low-paid and hazardous work.
Discrimination of particular groups of workers
may have its effect in a whole range of labour con-
ditions. A number of aspects are to be taken into
account when analysing a situation of discrimina-
tion, including hiring procedures, job allocation,
(in-)equal opportunities, dismissal, remuneration
and benefts, training and career development,
harassment and abusive treatment, segregation
and exclusion in the workplace, as well as the (in-)
accessibility of grievance procedures.
Standards
ILO Discrimination in respect of employment •
and occupation Convention No 111.
ILO Equal remuneration for men and women •
workers for work of equal value Convention
No 100.
Existing initiatives
The Dalit Discrimination Check is a tool devel- •
oped specifcally to help companies prevent
discrimination and exploitation of Dalits in
their Indian operations and suppliers. The tool
is designed as a comprehensive checklist
consisting of self-guided questions and indi-
cators that highlight possible violations. The
tool provides simple descriptions of what the
components of Dalit discrimination looks like
in the business context, and allows managers
to check their company’s policies, procedures
and performance (Danish Institute for Human
Rights 2008).
The Ambedkar Principles form a set of •
employment and additional principles on
economic and social exclusion formulated to
assist all foreign investors in South Asia to
address caste-discrimination (IDSN, 2006).
Recommended steps
Comply with all applicable laws, nationally •
and internationally accepted standards on dis-
crimination, whichever offer greater protection.
Take full responsibility for the workforce, both •
direct and sub-contracted, including the sup-
ply chain.
Get informed about the risks and occur- •
rence of discriminatory policies and practices
throughout supply chains.
Fight discriminatory policies and practices that •
put women, migrant workers, young people
and other vulnerable components of the
labour force such as victims of caste-based
discrimination in a disadvantaged position.
Promote equal opportunities in the workplace •
throughout the supply chain.
Get acquainted and work with specifc anti- •
discrimination principles and tools, such as
the aforementioned Dalit Discrimination Check
and the Ambedkar Principles.
Consider forms of affrmative action to answer •
to the specifc position of disadvantaged
workers.
Contribute to improve unionisation rates •
among women, migrant workers, young work-
ers and other disadvantaged groups.
Reset. Corporate social responsibility in the global electronics supply chain 40
Issues
The majority of activities in the global electronics
sector are part of the formal economy. That is to
say that these activities are taxed, government
monitored and socially and legally regulated by
societal institutions. However, informal workers
make an important contribution to the electron-
ics supply chain, especially in the mining and
disposal phases. These workers do not enjoy any
form of social or legal protection to shield them
from the harsh implications of illness, disability or
unemployment. Long working hours, meagre pay,
exploitation, discrimination, etc. are no exception
for mine workers and informal waste workers.
Moreover, employment in the manufacturing phase
is increasingly characterised by informalisation.
Other terms for the same and related processes
are casualisation or contractualisation of employ-
ment. The common feature: it makes employment
increasingly precarious. The employment practices
associated with precarious work include:
direct hire on temporary labour contracts for •
fxed or limited term or fxed task;
hiring in labour via employment agencies or •
labour brokers;
contracting out functions to other companies •
(off-site or on-site);
personal labour contracts as bogus ‘self- •
employed’ workers;
the replacing of regular contracts by renew- •
able, short term contracts. A company may for
example employ a minimum of skilled workers
and hire other workers, often less skilled and
cheaper, on a contractual basis, dealing with
fuctuations by adding workers on a short term
basis;
abusive probationary periods; •
disguised employment training contracts; •
on call/daily hire; •
illegal or involuntary part-time work; •
home working (IMF, 2007). •
It is estimated that currently in many instances
50% of the labour force in a given electronics
factory consists of contract workers, and at times
even up to 90%. Within the broader metal sector
the electrical & electronic industries stand out as
the industries which have been more affected than
others by the informalisation of employment (IMF,
2007).
While labour fexibilisation may have a positive ring
to it, especially for employers, the reality is that for
workers it oftentimes means increasing insecurity
of employment, income and livelihood. Wages of
contract workers are generally signifcantly lower.
Contract workers can lay no claim to employ-
ment rights which means: no paid sick leave; no
holidays; no annual leave; none or smaller allow-
ances for transport or energy costs; none or lesser
annual bonuses or incentives for diligence since
these are usually granted only to regular workers,
etc. Workers employed through an employment
agency are treated differently for the same work.
Apart from being paid lower wages, these workers
also have to pay for safety clothing and medi-
cal tests, while for regular workers the employer
would bear such costs. A company can terminate
the services of a contractual or temporary worker
at any time. Often access to social services is
limited as well.
The current global economic downturn, exacer-
bates the precarious situation of workers. Again,
women are being disproportionately affected as
the frst jobs to be cut have been those primarily
held by women.
Security of employment –
precarious work
Part 2. Social aspects 41
Standards
ILO Tripartite Declaration of Principles Con- •
cerning Multinational Enterprises and Social
Policy, articles 24-28.
Existing initiatives
International Metalworkers Federation (IMF) •
“Precarious Work Affects Us All” is a global
union campaign to stop the rise in precarious
employment and regain power and justice for
working people.
European Metalworkers federation (EMF) •
“For more secure employment - against pre-
carious work”.
The objectives of both campaigns are:
•
ecarious work does exist, wages and conditions
must be equal to those of regular workers and full
coverage of social security should be guaranteed;
• workers should be directly hired and indi-
rect employment discouraged;
• basic job security has to be guaranteed,
as well as full protection in the feld of
health and safety.
Recommended targets
Comply with all applicable laws, nationally •
and internationally accepted standards on
employment security, whichever offer greater
protection.
Ensure suppliers have legal contracts and rec- •
ognised employment relationships with their
employees that are in accordance with their
national law and good practice.
Treat casual or temporary workers equally to •
regular workers.
Provide regular employment to workers in the •
supply chain.
Commit to converting temporary contracts •
into regular contracts.
Include employment agencies in codes of con- •
duct and make employment agencies comply
with the code of conduct.
Restrict the use of temporary/contract •
employment to cases of genuine need. Poten-
tial or actual fuctuations in production do not
automatically sanction the use of temporary/
contract work. Setting a proportional maxi-
mum of contract workers may be necessary.
Protect historically established social benefts •
of workers in their supply chains such as
annual leave, severance payment, maternity
benefts and proft sharing.
Women make up the bulk of temporary and contract workers in export oriented global supply chains.
The increasing informalisation of labour leaves a growing number of women workers outsides wel-
fare and social protection regimes. There are indications that women remain in precarious employ-
ment longer than men. The erosion of working conditions for precarious workers is having a severe
impact on families. Without permanent employment and lower wages, planning to have children
becomes more diffcult and taking time off in case of illness or for vacations is less easy. As women
are often the main breadwinners the importance of women’s income to families should not be under-
estimated. Unpredictable work hours, confict over the division of household tasks, relationships
under pressure, domestic violence, increased stress, negative health implications and prematurely
forced independence for children are reported consequences of women’s precarious employment
(Farley, 2009).
Reset. Corporate social responsibility in the global electronics supply chain 42
Issues
Occupational health and safety issues are present
throughout the supply chain. Many health and
safety hazards occur during the extraction of
primary materials used in electronics equipment.
In most cases, mining is strenuous, backbreaking
and dangerous work. Basic safety measures are
often lacking and a wide range of health haz-
ards are linked to toxic materials, dust, confned
spaces and working in hot, cold or wet conditions.
Equipment may be minimal or broken. Ergonomic
problems may be considerable. Medical or health
facilities are very often inadequate or simply
absent. Hazardous situations are even more likely
to occur in informal mining, or illegal mining in
confict areas, where any form of regulation will be
absent.
Production workers in the electronics industry
usually work in seemingly clean and relatively
noise-free environments. Microchips, for example,
are manufactured in temperature- and moisture-
controlled aseptic ‘clean rooms’ in which the air
is fltered and workers wear special garments.
Nevertheless this work still poses many health
threats. Several processes in electronics manu-
facturing, eg, soldering, doping, photolithography,
electroplating, vapour deposition, etching and
crystal polishing, involve working with hazardous
substances. Reportedly, between 500 and 1,000
different chemical are used in the semiconductor
industry, including carcinogens such as solvents,
arsenic-based substances, and heavy metals
like cadmium and lead (HESA newsletter, 2008).
Soldering liquids contain resins, metallic salts or
fuoric borates. Cleaning agents can consist of
metallic dust or halogen or non-halogen organic
solvents. Dopants such as diborane, arsine and
phosphine are considered the most potentially
dangerous group of chemicals in the electronics
industry. Acids include hydrofuoric acid, which
represents one of the most serious acute environ-
mental and health risks (CBI, 2008). Workers can
be exposed to electromagnetic felds as well as to
ionising and non-ionising radiation (HESA newslet-
ter, 2008).
There are many health problems that can result
from working in this industry: breathing in chemi-
cal fumes and vapours or metallic dust may cause
respiratory problems. Contact with cleaning
agents may cause burns, eye irritation and skin
diseases such as eczema. Accidental release of
dopants may damage the nervous system and red
blood cells, cause cancer or even death. Chronic
effects of acid contamination may be lung cancer,
bone damage and erosion of teeth. Overexposure
to solvent vapours may cause headaches, fatigue,
and drowsiness, lack of co-ordination or uncon-
sciousness. Long-term exposure to solvents may
cause liver and kidney failure (CBI, 2008).
Women workers in the electronics industry are
faced with specifc health concerns. In the 1980s
and 1990s, rumours and reports abounded about
the damage to women’s reproductive health
caused by chemicals in the semiconductor indus-
try. Prolonged and irregular menstruation cycles,
reduced fertility and increased risk of spontaneous
abortions were among the reported effects. Glycol
ethers, chemicals then widely used as solvents
in the semiconductor industry, were singled out.
While most semiconductor manufactures have
since then gradually reduced their reliance on
glycol ethers, the industry is still using other repro-
toxins (HESA newsletter, 2008).
In a groundbreaking article published in 2007
the serious health concerns of semiconduc-
Occupational health
and safety
Part 2. Social aspects 43
tor workers have been documented, detailing
cancer and reproductive health hazards (Ladou
and Bailar, 2007). Several epidemiological studies
done in the US in the 1980s all found high rates
of miscarriages among semiconductor workers.
IBM maintained a Corporate Mortality File which
documented that, over a 30-year period, IBM
workers with exposure to chemicals died younger
and more frequently from toxic-related cancers
than the national average (Clapp, 2006). The Scot-
tish Health and Safety Agency conducted a health
study of workers at National Semiconductor in
Scotland and found disproportionately high rates
of cancer among them. In 2005, after years of
resistance, the American Semiconductor Industry
Association has commissioned Vanderbilt Univer-
sity to conduct a chip industry worker health study
to assess the cancer risk to semiconductor work-
ers. The results are expected in 2009 (Business
Wire, 2005).
Ergonomic problems arise as a result of the strict
working regimes that are oftentimes imposed on
workers. Where ‘standing operations’ policies
apply, for example, workers are not allowed to sit
down. In some cases, companies even dictate the
pace at which workers have to walk, under penalty
of a disciplinary measure of some sort.
Research demonstrates that part-time workers
with no job security are more likely to develop
physical and mental health problems than regular
workers. Migrant workers often have limited or no
access to health insurance or health services.
The handling of electronic waste is associated
with considerable health hazards, especially in
the case of the informal and unregulated waste
disposal that often takes place in developing
countries. Many of the electronic products contain
countless hazardous chemicals and materials and
therefore the recycling and disposal of e-waste
poses a threat to the environment and to human
health. In known e-waste dumping grounds in
Nigeria, Ghana, China and India electronic waste
is taken apart at open-burning sites. Toxic metals
found in soil and sediment samples in Ghana
include lead in quantities as much as 100 times
above levels found in uncontaminated samples.
In the Ghanaian samples other chemicals such as
phthalates, which interfere with reproduction, and
high levels of chlorinated dioxins, known to cause
cancer, were found as well. The exposure of work-
ers and bystanders to hazardous chemicals may
be substantial. In areas in other countries where
e-waste recycling takes place, increased exposure
to toxic chemicals has been reported for workers
and/or local residents, including for chlorinated
dioxins and furans (PCDD/Fs), certain PBDEs, and
the toxic metal lead (Greenpeace, 2008).
Standards
ILO Occupational Safety and Health Conven- •
tion No 155.
European Commission Directive 2002/95/ •
EC on the Restriction of the Use of Certain
Hazardous Substances in Electrical and Elec-
tronic Equipment (RoHS). The major provisions
include that Member States shall ensure that,
In 2004, an outbreak of cadmium poisoning cases occurred in four subsidiary factories of Gold Peak
Batteries in mainland China as well as in Hong Kong. One case concerned the cadmium poisoning
of workers of the Gold Peak Batteries plant in Hong Kong. Another case concerned the cadmium
poisoning of workers at JetPower, a Gold Peak subsidiary based in Shenzhen, China. For years
now, workers have been campaigning for fair compensation. Cadmium is a toxic heavy metal and
an important constituent of nickel-cadmium batteries as produced by GP Batteries. Cadmium is a
known human carcinogen that causes damage to lungs, kidneys and bone tissue in case of long-
term exposure. Gold Peak Batteries has long-established supply agreements with some of the
world’s biggest consumer brands. Its (rechargeable) batteries and components are found in cordless
and wireless phones, toys, power tools, and are sold across the world (Globalization Monitor, 2009).
Reset. Corporate social responsibility in the global electronics supply chain 44
from 1 July 2006, new electrical and electronic
equipment put on the market does not contain
any of the six banned substances: lead, mer-
cury, cadmium, hexavalent chromium, poly-
brominated biphenyls (PBB) or polybrominated
diphenyl ethers (PBDE), in quantities exceed-
ing maximum concentration values.
European Commission Directive 2002/96/EC •
on Waste Electrical and Electronic Equipment
(WEEE).
European Commission Directive 2006/66/EC •
on batteries and accumulators and waste bat-
teries and accumulators
Directive 2006/121/EC of the European Parlia- •
ment and of the Council concerning Registra-
tion, Evaluation, Authorization and Restriction
of Chemical substances (REACH), entered
into force on June 1, 2007. The aim of REACH
is to further improve the protection of human
health and the environment through the better
and earlier identifcation of certain chemical
substances. It is legislation from the European
Union, and applies to all suppliers (inside
and outside Europe) that want to sell, import
or manufacture chemicals and/or products
containing certain chemicals in the European
Union. Part of REACH is a list of Substances
of Very High Concern (SVHC). Critical note:
the effect of REACH is not yet known and the
process of prioritising and reviewing substanc-
es may take decades.
Occupational Health and Safety Assessment •
Series (OHSAS 18001) - an international
occupational health and safety management
system specifcation.

Existing initiatives
Silicon Valley Toxic Coalition and the Interna- •
tional Campaign on Responsible Technology,
1970s pioneers in addressing occupational
health impacts and community health issues in
Silicon Valley, California, US.
PHASE Two, People for Health and Safety in •
Electronics, a campaign launched in 1997 by
Jim McCourt.
The Asian Network for the Rights of Occupa- •
tional Accident Victims (ANROAV) has a focus
on electronics workers’ health and safety.
The New England Lead-Free Electronics •
Consortium - a collaboration of industry,
government, and academia, launched by the
Toxics Use Reduction Institute (TURI) and the
University of Massachusetts Lowell to help the
electronics industry fnd alternatives to lead.
The Agreement on Minimum Requirements for •
Plant Level Joint H&S Committees, concluded
between ArcelorMittal and the International
Metalworkers Federation, June 2008.
The European Work Hazards Network has •
included workshops on electronics health and
safety at its conferences.
The recycling of printed circuit boards in Guiyu, China, a village intensely involved in e-waste
processing, may present a signifcant environmental and human health risk. To evaluate the extent of
heavy metals (Cd, Co, Cr, Cu, Ni, Pb, Zn) contamination from printed circuit board recycling, surface
dust samples were collected from recycling workshops, adjacent roads, a schoolyard and an out-
door food market. ICP-OES analyses revealed elevated mean concentrations in workshop dust (Pb
110000, Cu 8360, Zn 4420, and Ni 1500 mg/kg) and in dust of adjacent roads (Pb 22600, Cu 6170, Zn
2370, and Ni 304 mg/kg). Lead and Cu in road dust were 330 and 106, and 371 and 155 times higher,
respectively, than non-e-waste sites located 8 and 30 km away. Levels at the schoolyard and food
market showed that public places were adversely impacted. Risk assessment predicts that Pb and
Cu originating from circuit board recycling pose potentially serious health risks to workers and local
residents of Guiyu, especially children, and warrants an urgent investigation into heavy metal related
health impacts. The potential environmental and human health consequences caused by uncon-
trolled e-waste recycling in Guiyu serve as a case study for other countries involved in similar crude
recycling activities (Leung, 2008).
Part 2. Social aspects 45
Recommended steps
Comply with all applicable laws, internation- •
ally and nationally accepted standards and
industry standards on occupational health
and safety, whichever offer workers greater
protection.
Set minimum standards in every site as well as •
in the facilities of suppliers.
Recognise that trade unions and worker safety •
representatives have a vital role to play in
improving health and safety.
Allocate trade unions and workers safety rep- •
resentatives inspection powers and the right
to be consulted on occupational health and
safety matters.
Commit to form joint management/union •
health and safety committees with at least
50% participation of workers.
Allow such committees the authority to control •
investments in occupational health and safety
measures or to stop production in specifed
situations, as defned by national legislation
Commit to provide workers with intelligible •
information, and training and education pro-
grammes, specifcally targeting new employ-
ees and women workers.
Allow workers to raise health and safety mat- •
ters anonymously, without fear of reprisal
Ensure maintenance controls and cooperate •
with labour and safety inspections.
Minimise fumes, vapours, dust production, •
noise, etc.
Ensure high quality protective clothing and •
gear including gloves, earplugs etc. are made
available free of cost for all workers, including
contract workers.
Ensure warning notes or information on safe •
handling methods are posted and visible for
all workers.
Ensure manufacturing facilities are equipped •
with suffcient lightning, systems for ventilation
and extraction.
Establish systems to deal with uncontrolled •
emissions of toxic substances, ie, emergency
procedures, warning systems, evacuation
plans, including information for the community
where production facilities are located.
Provide frst-aid facilities. •
Ensure medical care is provided to victims of •
occupational accidents.
Ensure fair compensation of victims of occu- •
pational accidents.
Commit to the phasing-out of hazardous •
chemicals. Commit to toxics use reduction
strategies.
Commit to the design of products with greater •
life spans, that are safer and easier to repair,
upgrade and recycle.
Practice transparency about occupational •
health issues.
Collaborate with large-scale surveys - includ- •
ing substantial samples of exposed workers
- regarding the exposure to toxic products and
other occupational health issues in electronics
manufacturing.
Reset. Corporate social responsibility in the global electronics supply chain 46
Issues
Long working hours and forced overtime work are
widespread phenomena in the global electronics
sector. This damages people’s health and under-
mines family life (ETI). In the computer manufac-
turing industry, for example, excessive compulsory
overtime is found, coupled with non-payment
of this overtime. In the Philippines, Thailand and
China working hours can run to 12-hour working
days, and weeks without a day off; amounting to
working weeks of 7x12 hours= 84 hours. This is
way over the maximum of what is internationally
accepted, ie, 48+12=60 hours per week and at
least one day off every 7 days (SOMO, 2009).
There is a pertinent relation between overtime and
low wages. The minimum wages paid for normal
working hours become in fact a ceiling, keeping
workers in a poverty trap. Under these conditions,
workers will want to work every extra hour they
can.
Refusal of overtime is often not an option anyway.
Workers refusing overtime run the risk of being
punished or even fred.
As argued in the chapter on gender, overtime is
an important gender issue. Women workers in
particular have diffculties in making arrangements
for child and family care, especially at short notice,
and have to juggle work and domestic responsi-
bilities.
Electronics companies do acknowledge that long
working hours, forced overtime and non-payment
of overtime are unacceptable, but so far are failing
to effectively address problems.
Working hours
The EICC has identifed a number of root causes that impact work hours through input of its
members, benchmarking research, and detailed analysis completed by the EICC Working Hour
Task Force. The following areas were identifed for focus given the fact that EICC members have
greater sphere of infuence or ability to control them.
For brands:
• ad-hoc orders which are diffcult to plan for and may require short term ramp ups;
• ongoing fuctuation in customer demand, as well as non-linear orders, which create
supplier diffculties in responding to volume changes;
• lack of customer awareness of how their decisions impact the downstream supply chain;
• potential lack of alignment between business decisions and CSR;
• strong pressure from brands to suppliers for cost reduction across the supply chain;
• cost reduction strategies may not be aligned to CSR.
For suppliers
• inconsistent messaging and inability to push back on customers for fear of damaging
relationship;
• lack of effective tools to manage and control working hours across the supply chain;
• Lack of clear business case for implementing change (EICC Working Hours Task Force, 2009).
Part 2. Social aspects 47
The problem is that codes of conduct do not
provide for a clear cap on working hours and
overtime, or measures against forced overtime.
As codes of conduct lay down the standards that
buying companies expect from their suppliers, this
is a clear message about what is expected from
manufacturers.
Standards
ILO Observance of maximum number of work- •
ing hours Convention No 1.
Recommended steps
Comply with all applicable laws, international •
accepted standards and industry standards
on working hours, whichever offer workers
greater protection.
Ensure that a regular workweek shall not •
exceed 48 hours.
Ensure that workers are provided with at least •
one day off after six consecutive days of work,
as well as public and annual holidays. Ensure
that overtime work shall under no circumstances
exceed 12 hours per employee per week.
Ensure all overtime work is voluntary and shall •
not be demanded from workers on a regular
basis.
Ensure workers throughout their supply chain •
are provided with written and understandable
information about their employment condi-
tions, including working hours, before entering
employment.
Ensure that the wages for a normal working •
week amount to a living wage.
Reimburse all overtime work at least at such •
a premium rate as required by law. In those
countries where a premium rate for overtime is
not legally required, companies are to ensure
that workers are compensated for overtime
at a premium rate of at least 150% of their
regularly hourly compensation rate.
Include the above clauses into their codes of •
conduct as well as in company level collective
bargaining and industry framework agree-
ments.
Reset. Corporate social responsibility in the global electronics supply chain 48
Issues
In many countries, minimum wages set by the
government fall far short of what many estimate
to be a living wage. Minimum wages are generally
low, often too low to sustain a decent livelihood.
Signs of poverty wages include taking on extra
work, eg, homework or another factory job (ETI,
2008), or even children being forced to work. The
relation between wages and overtime is strong.
This is certainly the case for many workers in elec-
tronics supply chains. A living wage means that
wages and benefts paid for a standard working
week must always be suffcient to meet the basic
needs of the workers and their families, such as
housing, clothing, food, medical expenses, educa-
tion, and additionally provide some discretionary
income (savings). A living wage must refect local
conditions and may therefore vary from country
to country or even region to region (Clean Clothes
Campaign, 2008). In other words, a ‘needs based
minimum wage’ (Asia Floor Wage Coalition, 2005).
In addition to being generally too low, legal mini-
mum wages are often taken as standard or even
a maximum, instead of being taken as a foor.
So, even when buying companies are encourag-
ing their suppliers to pay workers their statutory
entitlements (the national minimum wage, plus any
additional benefts such as sick pay, overtime pay
and pension contributions), workers still have huge
problems to eke out a decent living for themselves
and their families. There is still no systematic
payment of a living wage to the vast majority of
workers in global supply chains, even in the frst
tier of supply chains. In many countries the situa-
tion is worsening as the cost of staple foods and
fuel escalates (ETI, 2008). The current economic
downturn is not making things any better.
An additional worrying aspect is that women work-
ers generally earn less than their male colleagues
and equal pay for equal work is not yet a reality
(ILO, 2008).
One reason for low wages in export-oriented man-
ufacturing sectors is the very low level of unioni-
sation and consequent absence of any form of
collective bargaining, while workers and employ-
ers bargaining freely is the most sustainable and
legitimate way of calculating and maintaining a liv-
ing wage (ETI, 2008). In this absence, the statutory
minimum wage therefore becomes the sole norm
for wage setting (Asia Floor Wage Campaign,
2005). As with other labour rights, workers are
often afraid to fght for better wages, for fear they
might be fred or the factory might pack up and
move to a country or region where wage levels are
lower and workers are even less demanding.
Often, workers are uncertain about their actual
wages, as written contacts and regular pay slips
may not be provided, or may be incomprehensibly
framed, especially for illiterate workers.
In computer manufacturing in China, excessive
and unjust wage reductions are applied when
workers make mistakes or are too late for work
(SOMO, 2009).
Wage
Violations of wage and beneft also emerged as a key area of non-conformances and included
instances of paying workers less than the required wages, overtime premiums, and imposing disci-
plinary wage deductions. This emerged from the results of 36 of the second-round pilot shared audits
completed by the EICC in 2007 and 2008 (EICC, 2008).
Part 2. Social aspects 49
Buying company pricing and retailing policies are
very important to any discussion on living wages.
Brand name companies speak with suppliers
about comparative wage rates across their supply
chain as an element of competition. Yet there is
a sharp discrepancy between the pricing policies
of brands and what they expect local factories to
pay their workers (JO-IN, 2005). This pressure on
prices is huge in the garment sector and the same
goes for the electronics sector. The argument
that is used by the industry to counter demands
for higher wages is that the margins available
to industry do not allow increase in wages. This
argument does not hold true when manufacturing
activity and labour costs are located within the
totality of the supply chain. Arguably, if custom-
ers would pay a fair price, the ability of the supply
chain to absorb wage increases at the manu-
facturing end would increase very substantially
(Asia Floor wage Coalition, 2005). Retailer policies
are therefore directly relevant for discussions on
wages.
Standards
UN Declaration of Human Rights, article 23, •
paragraph 3.
ILO Tripartite Declaration of Principles, article •
34.
ILO Minimum Wage Fixing Convention No 131. •
Existing initiatives
ETI living wage project in Bangladesh. •
The JO-IN ‘wage ladder’ approach. The ‘wage •
ladder’ tool offers a pragmatic benchmarking
system for charting factory progress in improv-
ing wages (JO-IN, 2008).
The Asian Floor Wage Coalition. The pro- •
posal for an Asian foor wage was developed
by union leaders, international NGOs and
activists in India, later in Asian countries and
internationally.
Recommended steps
Comply, as a foor, with all applicable laws, •
regulations and industry minimum standards
regarding wages.
Accept as a principle that workers shall have •
the right to a living wage.
Include these standards and principles into •
codes of conduct, buying practices, as well
as into collective bargaining and framework
agreements.
Find out what wage benchmarks exists in the •
sourcing countries as well what workers in the
supply chain are being paid, while taking into
account non-monetary benefts (food, trans-
port, housing, medical care), as well as social
security and tax payments.
Ensure that throughout the supply chain •
wages and benefts paid for a standard work-
ing week shall, as a foor, be suffcient to meet
basic needs of workers and their families and
provide some discretionary income.
Jointly agree upon the defnition and a way of •
calculating and maintaining a living wage with
concerned stakeholders including workers’
representative organisations.
Make sure the living wage principle applies •
to all workers of the workforce in the supply
chain.
Take a step-by-step approach to raising •
wages, like the JO-IN ‘wage ladder’; allowing
wage levels to be plotted over time against
various objective criteria.
Be clear about how the wage increases will •
be paid for (increasing prices for consum-
ers, absorbing costs by increasing internal
effciency, increasing overheads or improving
productivity).
Ensure the level of wages and benefts are •
reviewed on a regular basis.
Refrain from making deduction from wages for •
disciplinary purposes.
Ensure workers throughout their supply chain •
are provided with written and understandable
information about their employment condi-
tions, including wages and benefts, before
entering employment.
Reset. Corporate social responsibility in the global electronics supply chain 50
Ensure that workers are provided with the •
particulars of their wages for the whole pay
period each time they are paid; that remunera-
tion is rendered in a manner convenient to
workers, either in cash or check form; and that
wages and other benefts are paid on a regular
and timely basis.
Engage in a coordinated effort with govern- •
ments to support the drive of suppliers for
productivity aiming for stable, long-term
buyer-supplier contracts.
Advocate and/or support advocacy towards •
national governments for increases in the
minimum wage consistent with ILO Conven-
tion 131.
Part 2. Social aspects 51
Issues
Home working is a form of employment under-
taken by people either in their homes or in their
yards, garages or felds nearby for a cash income.
Home working is found in many different sec-
tors of industry, all over the world. However, it
is generally hidden and home workers are rarely
acknowledged as part of the workforce or counted
in offcial statistics. Trade unions are often not able
to organise and protect home workers. Women
constitute over 90% of all home-based work-
ers worldwide. Pay and conditions are often well
below minimum or average levels (HomeWork
Worldwide, 2009).
Home workers make up a fexible workforce; often
they are piece-rate workers, who usually have no
guarantees of a regular fow of work, low rates
of pay, no social security and little health and
safety protection. When they are sick or too old
to work they have no sick pay or pension. Any
hazards from the work affect all members of the
home worker’s family including young children and
elderly people. Home working increases the risk
of child labour, as children may be involved when
work is brought into the home. Home-based work
is almost always informal, in the sense that it takes
place outside formal systems of labour or social
regulation.
Home work is usually found in labour-intensive
parts of the production process, with relatively
simple machinery being used. The work done
by home workers is often similar to that done by
factory workers, except that the workplace is the
home. Sometimes home workers get work directly
from a factory and know their employer. More
commonly, they receive work from a subcontractor
or intermediary and may not even know details of
their main employer.
Home work appears to be on the rise around the
world, because of shrinking formal employment
opportunities and competitive pressures in the
global economy leading to more outsourcing and
subcontracting.
In the case of electronics, various forms of home
working occur. The mining phase, the extraction
of metals used in electronic products, is to a large
extent part of the informal economy. Labour laws
do not apply, labour inspection is a fction. Parts
of the extractives process can be described as
home work, for example when miners have set up
their homes at mining sites as is often the case
in African countries. In the manufacturing phase,
a number of products and processes are done
by women at home, including the assembly and
soldering of printed circuit boards; assembly of
switches and cables or other assembly work with
small components. Often the work is manual, but
sometimes small tools are used and in the case
of soldering, a soldering iron. This type of home
working is not limited to developing counties, but
has been found in the UK as well, for example.
The recycling of e-waste, including the dismantling
of computer parts, is also typically done by home
workers, eg, in China and Indonesia.
Standards
ILO Home work Convention No 177. •
Accompanying Recommendation No 186. •
Existing initiatives
Home Workers Worldwide (HWW) is a UK-based
organisation set up to support the movement of
home-based workers around the world. Since the
1970s, there has been a growing movement to
Home work
Reset. Corporate social responsibility in the global electronics supply chain 52
organise for visibility and recognition, to improve
working and living conditions. HWW exists to sup-
port this movement and to help it grow.
Recommended steps
Recognise that home workers, as well as •
other categories of informal workers such as
artisanal miners, are part of the supply chain
workforce.
Map cases of home working in corporate •
supply chains and identify the home workers’
main employers.
Ensure that home workers working in supply •
chains are entitled to the same minimum rights
as other workers.
Include ILO Convention 177 in company •
codes of conduct.
Ensure home workers are brought within the •
scope of workers organisation and collective
bargaining.
Facilitate the inclusion of ILO Convention 177 •
into framework agreements.
Publicly promote full ratifcation of ILO Con- •
vention 177, adaptation of national policies
on home working, and the setting of minimum
wages for home workers.
Part 2. Social aspects 53
Issues
Poverty is the major reason behind the move-
ment of work-seekers from one country or region
to another. Besides migration from poor to rich
countries, poverty also fuels movements from one
developing country to others, or within countries.
Over the past decades there has been an increase
in labour migration. This increase is related to
the rise of economic inequality and increasing
economic insecurity, as well as the consequences
of political and armed confict. The increasing
informalisation of and competition within the
global economy has led to more fexible labour
markets and the demand for cheap labour, trigger-
ing migration.
Currently, labour migrants represent roughly 200
million people, or about three percent of the world
population, an increasingly vital part of the global
workforce. 90 million people migrate for work
globally every year and an increasing percentage
of those workers are moving between emerging
economies (BSR, 2008). Today, around half of the
world’s migrants are women (OSCE, 2009). The
feminisation of migration is a global trend; more
women are migrating and the demand for work-
ers in female-dominated sectors in countries of
destination is ever-increasing. Male migrants often
leave behind wives and families who have to fend
for themselves, depending on unstable, insecurely
transmitted funds.
Migrant workers form a vulnerable segment of
the workforce in global value chains, but have nev-
ertheless received little specifc attention. Migrant
labour also can be found in all phases of the
electronics sector, including the mining of metals,
the manufacturing of equipment, and the disposal
of electronic waste.
Migrant workers provide a hardworking labour
force in labour-intensive industries, but they are
also isolated and often heavily indebted. Reports
of abuse, forced labour and human traffcking are
increasingly common. Companies seem to prefer
migrant workers to local workers, as they are often
less articulate in claiming their rights. Lack of
knowledge of the local language and local employ-
ment conditions prevent migrant workers from
enforcing their rights and from seeking assistance.
Migrants are likely to fall prey to unscrupulous
recruiters, transportation companies and employ-
ers. Sometimes, migrant labourers are issued the
wrong visa – business visa instead of work visa,
for example, causing them trouble in looking for
work. Sometimes, workers are required to lodge
identity papers (such as passports, travel or
residency permits) with their employer which puts
them in an excessively dependent relation to their
employer. Due to these handicaps they are disad-
vantaged on the labour market. Where national or
local workers may decline to work for low wages
or in lesser working conditions, migrants have less
choice (La Strada, 2008). A widespread tendency
Migrant labour
The Mexican labour rights organisation Cereal supports workers in the electronics sector. The Mexi-
can electronics manufacturing industry is employing a considerable number of migrant workers.
Labour rights organisation Cereal estimates that nearly 50% of the workers of the Mexican electron-
ic industry are internal migrants, often on their way to the United States. Workers are known to come
from different southern Mexican provinces.
Reset. Corporate social responsibility in the global electronics supply chain 54
is to regard migrants as a complementary labour
force, and to assign them to the jobs with the
least attraction for nationals. As a result, migrant
workers have become akin to other sourced
commodities, with a premium on price over rights
and protections (BSR, 2008). Migrant workers are
vulnerable to the seasonality of the demand for
work. When orders are low, migrant workers who
are often on temporary contract are the frst to
lose their jobs. In short, migrant workers are the
quintessential precarious workers.
Migrants may have diffculties adapting to the
new societal environment and stand out for that.
As such they are an easy target for discrimina-
tion. Illegal or irregular migrants suffer from
fear and stress – fearful to be found out by the
immigration police, or to fall ill – as they often
do not have medical insurance. Living condi-
tions of migrant workers are often unsatisfactory.
Low incomes, high rents, housing shortages,
the size of migrants’ families and local prejudice
against foreign elements in the community are the
main factors which combine to cause a serious
accommodation problem. Often, migrants even
pay more for housing provided by the employer.
Most migrants are unaware of the human rights
protection and fundamental freedoms which they
are guaranteed under international treaties and
national laws (UNHCHR, 2009).
There are, in certain cases, bilateral agreements
between states covering migrant labour. Overall,
current regulation in emerging economies largely
fails to adequately protect (migrant) contract work-
ers. In some countries, laws mandate differential
treatment of migrant workers. In others, no legal
regulations are specifc to migrant workers and are
rarely enforced in favour of their protection. Export
Processing Zones (EPZs) and Free Trade Zones
(FTZs) often have independent legislation regard-
ing worker rights and protections, which usually
fall short of protecting migrant workers. Compa-
nies’ Codes of Conduct generally do not include
clauses on agent fees, legal status, minimum
length of service etc, all of which are important
to migrant workers. Apple’s supplier code is an
outstanding exception.
Typically, migrant workers incur debts to cover
travel expenses, visa costs, recruitment fees,
obligatory health checks. In addition of that,
migrant workers are faced with non-payment of
wage supplements, bonuses and wage refunds, as
well as with unlawful wage deductions.
In the Czech Republic, Vietnamese (electronics) workers are easily laid off – once laid off, it is hard
to fnd a new job, as migrants usually have visas for business license holders and are not entitled to
work elsewhere. Formally, migrant workers lose their work visa and residence permit when they are
laid off. Therefore, migrant workers try to keep their job regardless of circumstances, which makes
them extremely vulnerable to abuse by their employers, such as forced overtime (La Strada, 2008).
In its Supplier Responsibility 2009 Progress Report, Apple writes about migrant labour: Our most
signifcant discovery involved recruitment practices in which our suppliers had hired workers
from one country to work in factories in another country. Of the 83 facilities audited, we found six
facilities where these contract workers stated they had paid recruitment fees that exceeded the
applicable legal limits—often requiring them or their families to incur a debt. We classifed this over-
charge as a core violation, our most serious category of violation, since these workers may not feel
at liberty to leave employment until the debt is paid. In addition to demanding reimbursement, Apple
has updated its Code to require that suppliers take responsibility for the entire recruitment process,
including the recruitment practices and fees of labour agencies in the workers’ home countries
(Apple, 2009).
Part 2. Social aspects 55
Standards
ILO Migrant Workers (Supplementary Provi- •
sions) Convention No 143.
ILO Forced labour Convention No 29. •
ILO Abolition of Forced Labour Convention •
No 105.
ILO Private Employment Agencies Convention •
No 181.
UN International Convention on the Protec- •
tion of the Rights of All Migrant Workers and
Members of Their Families.
Existing initiatives
Business Social Responsibility (BSR) works •
with its global network of more than 250
member companies to develop sustainable
business strategies and solutions through
consulting, research, and cross-sector col-
laboration.
La Strada International is a network of inde- •
pendent human rights NGOs aiming to prevent
traffcking in human beings with a focus on
women in Central and Eastern Europe. The
primary goal is to improve the position of
women and to promote their universal rights,
including the right to choose to emigrate
and work abroad and to be protected from
violence and abuse.
Global Forum on Migration and Development •
(GFMD).
Tenaganita – protecting the rights of women •
and migrants in Malaysia. Tenaganita’s mission
is to undertake research, advocacy and action
to prevent, solve and address grave abuses
that happen to migrants and refugees.
In Malaysia, the authorities have a stake in the traffcking of workers. Migrants obtain work permits
through employment agencies, permits which are approved by the government. At the Malaysian end
companies only need to state that they want to have an X number of workers to get an X number of
permits. This system is being misused as importing workers is a proftable business. Employment
agencies are easily tempted to make money out of labour migration and look the other way when
it comes to enforcing obligations under the contracts between workers and their intermediaries.
Cases are reported of corrupt offcials working hand in glove with unoffcial intermediaries. One
of the injustices migrant workers face for example in Malaysia is the deduction of levy from their
wages. The levy (1800 MYR, or about €357 per year) is a tax, supposedly to be borne by the employer
to discourage them from hiring migrants. However, almost all employers deduct this levy from the
migrant workers, effectively making it a tax on them. As many migrant workers work only part time,
this is felt as a disproportionate deduction (Tenanganita, 2009).
Flextronics provided seed money to help the Beijing-based Culture and Communications Center for
Facilitators (CCCF), an NGO committed to migrant worker issues, set up the Zhuhai Social Work and
Education Development Center for Facilitators (SWEDCF). This centre, in the vicinity of the Flextron-
ics industrial park in Zhuhai, aims ‘to enhance migrant talents, give them a sense of belonging in the
community, help them assimilate into society, provide them with case and group counselling, and
train up more volunteers for community work to create a harmonious society.’ Launched in May 2009,
SWEDCF is the frst offcially-registered, non-governmental organisation in China that is sponsored
by a private company and backed by the Chinese government. In conjunction with the launch of the
Centre a seminar on migrant worker issues was conducted (Flextronics’ email message to GoodElec-
tronics, 26 June 2009).
Reset. Corporate social responsibility in the global electronics supply chain 56
Recommended steps
Comply with all applicable laws, nationally •
and internationally accepted standards on
protection of migrant workers, whichever offer
greater protection.
Develop and implement ethical recruitment •
policies incorporating specifc notions con-
cerning migrants and women (OSCE, 2009).
Gain a more complete understanding of the •
use of migrant labour within the supply chain,
including migrant workers’ countries of origin,
recruitment process and terms of employment,
through (feld) research and conversations with
suppliers.
Conduct a risk assessment of the supply •
chain examining the use of migrant labour and
determine the level of protections in place for
migrant workers in policies and implementa-
tion: by government and regional bodies;
under existing codes of conduct.
Integrate greater protections for migrant work- •
ers in the supply chain and engage directly
with suppliers on training and verifcation.
Contribute to informing migrant workers about •
their rights and the general conditions in the
country or region of employment, as well as on
visa procedures, wages and working condi-
tions.
Develop and implement anti-discrimination •
protections for migrant workers in the supply
chain:
• migrant workers should be provided the
same terms and conditions of employment
as non-migrant workers;
• migrant workers shall not be required to
lodge identity papers with their employers.
Employers may provide safekeeping of
such documents;
• ensure suppliers are taking responsibil-
ity for the payment of all legally allowed
fees and costs. Such fees and costs,
including health check, visa, work permit
or registration fees, may not be passed
on to employees in any form such as
wage deductions, garnishments, ‘levies’,
‘deposits’ or ‘guarantee monies’;
• ensure that migrant workers have employ-
ment contacts, and that suppliers comply
with local law regarding minimum length of
service, duration, renewal or other terms
of such contracts;
• make sure the terms of policies regarding
migrant workers are aptly communicated
to the workers concerned.
Include such protections into codes of con- •
duct. See for example the policies developed
by Nike (Nike, 2009) and Apple (Apple, 2009).
Include (migrant) workers employed by •
employment agencies into collective bargain-
ing agreements.
Make sure migrant worker issues are •
addressed by auditing activities, and that
migrant workers are adequately included in
audit interviews.
Employ on-site migrant worker coordinators •
who speak the languages of both the migrant
workers as well as the factory management.
Support programmes strengthening the rights •
of migrant workers such as the funding of
community centres catering to the needs of
migrant workers.
Include migrant labour issues in CSR •
reporting.

Part 3.
Environmental aspects
Reset. Corporate social responsibility in the global electronics supply chain 58
Issues
The environmental impact of electronic products
is huge. Some factors to take into account are eg,
the effects of the irresponsible mining of precious
metals required for electronic products, or the
pollution caused by toxic chemicals used during
manufacturing. Life Cycle Analysis (LCA) shows
that one of the most critical factors is the massive
consumption of energy during mining, component
manufacturing and recycling of electronic equip-
ment. One of the factors contributing to this high
level of energy consumption is the obsolescence
of electronic equipment. In developed countries,
mobile phones have a life cycle of less than two
years; the average lifespan of computers has
dropped from six years in 1997 to just two years
in 2005. (Greenpeace). This obsolescence has two
sides: ‘planned’ and ‘perceived’ obsolescence.
Planned obsolescence refers to the fact that this
type of equipment is not designed to last. The
‘perceived’ obsolescence adds to this; infuenced
by marketing and retailing practices consumers
are convinced they need new stuff all the time, as
a consequence they keep on replacing ‘obso-
lete’ products with newer models. (Story of Stuff,
2007). The overall use of electronic products is
supposed to increase in the coming years, due to
various factors, like the continuing multiplication of
products per household, the increase of computer
and television screen sizes, and the switch to high
energy consuming high defnition.
Then there is the high energy consumption of
electronic products itself. Again, this relates to
insuffciently sustainable design of electronics
devices. Most products are burning up at least half
as much power when idle as when they are fat
out. Machines with external power supplies draw
current, even when the device itself is switched
off. Cathode ray tube screens consume power
continuously, compared to fat screen monitor
that consume little or no energy when in stand-by
mode. Typical ‘thick client’ hardware has much
higher energy consumption than ‘thin client’ hard-
ware. Another factor that comes into play is the
substantial increase of the number of data centre
over the past decades. Data centres nowadays are
full up with energy consuming hardware. Storage
technology is becoming the biggest energy con-
sumer in contemporary data centres. The cooling
of such data centres is highly energy consuming.
Careless consumer behaviour is not helping.
Mobile phone chargers are left plugged in. Com-
puters are left on when, in stead of being turned
off. Some estimates claim that as much as 60%
of the capacity of every disk that is used to store
business information contains stale, duplicated
or otherwise useless data as a result of poor data
discipline (Greendata, 2009).
Slowly, companies are developing policies on
energy effciency as part of their environmental
policies, focusing on reducing the energy needed
to manufacture and use their products. These poli-
cies are generally limited to the companies’ own
operations – a supply chain view has not yet taken
root here.
Energy
Nokia has worked out that, if 10% of worldwide mobile phone subscribers unplug their charges
once their mobile phone is fully charged, enough energy would be saved to supply 60,000 European
homes with energy for a one year (Consumers International, 2008).
Part 3. Environmental aspects 59
Standards
Regulation (EC) No 106/2008 of the European •
Parliament and of the Council of 15January
2008 on a Community energy-effciency label-
ling programme for offce equipment.
Directive 2005/32/EC on the eco-design of •
Energy-using Products (EuP).
Exiting Initiatives
Various voluntary environmental performance •
eco-labels have developed criteria for lower
energy consumption during use and standby
of electronic appliances, including the Global
Ecolabelling Network (GEN) and the Euro-
pean Ecolabel (Green Flower). GEN is a third
party programme that awards a license that
authorizes the use of environmental labels
on products indicating overall environmental
preferability of a product within a particular
product category based on life cycle consid-
erations. GEN has eg, formulated Core Criteria
for personal computers, and encourages its
members to consider inclusion of these core
criteria in their own programme criteria docu-
ments and processes. The European Eco-label
has developed criteria for personal and port-
able computers.
Energy Star standard, a joint program of the •
U.S. Environmental Protection Agency and
the U.S. Department of Energy, is helping
to protect the environment through energy
effcient products and practices. Other well-
known eco-labels include TCO, an eco-label
for IT products and the Blue Angel. The Energy
Star energy standard is increasingly taken as a
minimum requirement.
Greenpeace Guide to Greener Electronics •
with specifc criteria on energy use. Again, the
Energy Star standard is taken as a benchmark.
The Green Grid is a voluntary global corporate •
consortium that is developing standards to
measure data centre effciency, which includes
both the facility and the IT equipment inside of it.
The Green Data project argues that the most •
intelligent and strategic approach to slowing
the acceleration of power consumed by data
centres is to manage data better.
The Dutch ICT trade association ICT~Offce •
has developed an action plan to contribute to
improve energy effciency, by joining the Mul-
tiple Year Energy Effciency Agreement (MJA)
established by the Dutch Ministry of Economic
Affairs in July 2008. ICT companies subscrib-
ing to the objectives of this Agreement, com-
mit to make an effort to improve their annual
energy effciency with 2%, to bring about a
30% energy use reduction in 2020 compared
to the 2005-level.
Recommended steps
Comply with the highest international stand- •
ards regarding energy use.
Improve and promote energy effciency – in •
the own operations and throughout the supply
chain.
Increase and promote the amount of renew- •
able energy
1
– used in the own operations and
throughout the supply chain.
Invest in design for sustainability or design •
for recycling. More specifcally, improve the
energy effciency of new models of specifed
products, taking the latest Energy Star stand-
ards as a reference.
Develop innovative solutions enabling other •
sectors, industries and companies to reduce
their energy use. Promote energy saving atti-
tudes among users of electronic equipment.
Reform data centres. Apply rigorous data dis- •
cipline. Choose smart, energy-effcient cooling
systems.
1 “Renewable Energy Sources (RES)” shall mean renewa-
ble non-fossil fuels (wind, solar, geothermal, wave, tidal,
hydroelectric installations with a capacity below 10 MW and
biomass which means products from agriculture and forestry,
vegetable waste from agriculture, forestry and from the food
production industry, untreated wood waste and cork waste)
as in the defnition used in the Proposal for an EU Directive on
the promotion of electricity from renewable energy sources in
the internal electricity Market - (http://www.recs.org/doctree/
EU%20documents/RES-electricity%20directive.pdf).
Reset. Corporate social responsibility in the global electronics supply chain 60
Issues
The so-called greenhouse gases (GHG) are a
by-product of land-use changes, burning fossil
fuels, biomass burning and other industrial proc-
esses. Power generation and transportation score
high in GHG emission. Carbon dioxide (CO2)
is the principal greenhouse gas, PFCs or per
fuorocarbons form another class of potent GHG.
Greenhouse gases are at the root of far-reaching
climate changes, most importantly the warming
of the climate. This warming-up is evident from
numerous observations. Further effects of even
moderate warming may include sea level rise;
massive releases of greenhouse gases from melt-
ing permafrost and dying forests; more extreme
weather events such as heat waves, droughts
and foods; increased risks of fooding and ero-
sion; natural systems will be threatened; and an
increase in existing risks of species extinction and
biodiversity loss. The greatest impacts will be on
the poorer countries least able to protect them-
selves from rising sea levels, spread of disease
and declines in agricultural production (Green-
peace, 2009). Scientists and economists, including
the eminent Intergovernmental Panel on Climate
Change (IPCC), show that the temperature rise will
need to be halted well below 2°C (IPCC, 2007). A
25-40% reduction in industrial country greenhouse
gas emissions by 2020 is recommended to avoid
dangerous climate change, taking 1990 emis-
sion levels and Business as Usual (BAU) growth
as benchmarks. Carbon and climate change are
serious issues, with critical commercial, fnancial,
operational and brand implications. Therefore for
companies to manage carbon and climate change
in their supply chains is not an option, it is basic
business sense. There are fnancial and business
implications in not doing it (Carbon Disclosure
Project, 2009). A company’s carbon footprint is
the total set of directly and indirectly caused GHG
emissions. Increasingly, a supply chain view is
taken.
The information and communication technologies
sector is estimated to contribute between 2-3%
of worldwide greenhouse gas emissions. As the
industry continues to develop globally, this is set
to increase further. Emissions from the sector are
estimated to rise signifcantly over the coming
years – from 0.5 GtCO2e today to 1.4 GtCO2e in
2020 under BAU growth (Climate Group, 2008).
This concerns energy effciency of products and
services in the frst place. However, supply chain
emissions from activities such as processing,
packaging and transportation often exceed those
arising from an individual purchasing company’s
own operations (Carbon Disclosure Project,
2009). Looking at the carbon implications of raw
materials, production and disposal of electronics
products, throughout the different tiers of the sup-
ply chain, by making a Life Cycle Analysis, again
gives another picture.
The ICT industry clearly has a responsibility to
contribute to the much needed reduction of GHG-
emissions. This can be done by increasing the
energy-effciency of products and services and
by making use of renewable energy sources. It
has been calculated that ICT companies can help
cut projected GHG emission by 15% by 2020.
ICT companies could deliver approximately 7.8
GtCO2e of emissions savings in 2020 based on a
Business as Usual (BAU) estimation. In economic
terms, the ICT-enabled energy effciency translates
into approximately €600 billion ($946.5 billion) of
cost savings. A huge infuence ICT companies
can have on climate change would be by enabling
energy effciencies in other sectors. For example
by enabling smarter transport, building energy
Carbon footprint –
greenhouse gases
Part 3. Environmental aspects 61
effciency, smart power grids, and power transmis-
sion and distribution (T&D). In this way, carbon
savings fve times larger than the total emissions
from the entire ICT sector could be delivered in
2020 (Climate Group, 2008). Moreover, by taking
a supply chain approach – companies setting
reduction goals throughout their supply chain in
collaboration with their suppliers – signifcantly
higher reduction goals can be achieved.
An increasing number of ICT companies, including
HP, Nokia, Microsoft, Sun, Cisco and Ericsson,
Google, Dell, IBM and Lenovo, have already said
(through the Global e-Sustainability Initiative,
GeSI, or through the Climate Group) that they are
able to provide solutions that will reduce pro-
jected GHG emissions by 15% by 2020 through IT
enable solutions. Companies are already focusing
on product and service innovation, for example
by making their own operations, data centres and
product lines more energy effcient. Companies,
however, are mainly focusing on their own opera-
tions. Taking a supply chain view is still rare.
Standards
The United Nations Climate Change Confer- •
ence in Bali in 2007 culminated in the adoption
of the “Bali Road Map”, which includes the
Bali Action Plan that charts the course for a
new negotiating process designed to tackle
climate change.
The Greenhouse Gas Protocol (GHG Proto- •
col) is a widely used international accounting
tool for government and business to under-
stand, quantify, and manage greenhouse
gas emissions. The GHG Protocol serves as
the foundation for multiple GHG standards
and programmes in the world – including the
International Standards Organization (ISO). In
2001, the Greenhouse Gas Protocol Corpo-
rate Standard, was published. Since then the
GHG Protocol has built upon the Corporate
Standard by developing a suite of calculation
tools to assist companies in calculating their
greenhouse gas emissions and additional
guidance documents. The Carbon Disclosure
Company pledges
• Dell has pledged to reduce operational carbon intensity by 15% by 2012, based on 2007 levels,
and to further reduce worldwide facilities’ GHG emissions by 40% by 2015. Dell maintains that it
has already achieved carbon neutrality in its global operations.
2
• HP’s goal is to reduce energy consumption and the resulting greenhouse gas (GHG) emissions
from HP-owned and HP-leased facilities worldwide to 16% below 2005 levels, by the end of
2010
3
.
• IBM set itself an aggressive “second generation” goal: to reduce the CO2 emissions associated
with its energy use 12% by 2012 against a 2005 base year through: a) energy conservation,
b) use of renewable energy, and/or c) funding an equivalent CO2 emissions reduction by the
procurement of Renewable Energy Certifcates (RECs) or comparable instruments
4
.
• Vodafone: Cut emissions by 50% by 2020 (from the 2006/07 baseline). This target will be achieved
principally by improvements in energy effciency and increased use of renewable energy.
In addition, as part of its climate change strategy, Vodafone will be focusing on developing
products and services which will help customers limit their own emissions
5
.
2 http://i.dell.com/sites/content/corporate/corp-comm/en/Documents/Dell_CR_Summary_Report_FINAL.pdf
3 http://www.hp.com/hpinfo/globalcitizenship/gcreport/energy/operations/greenhouse.html
4 http://www.ibm.com/ibm/environment/climate/co2_secondgoal.shtml
5 http://www.vodafone.com/start/media_relations/news/group_press_releases/2007/01.html
Reset. Corporate social responsibility in the global electronics supply chain 62
Project and the Global Reporting Initiative are
using the GHG Protocol Corporate Standard.
The ISO Standard 14064-1:2006 is based •
upon the GHG Protocol Corporate Standard.
This standard specifes principles and require-
ments at the organisation level for quantifca-
tion and reporting of greenhouse gas emis-
sions and removals. It includes requirements
for the design, development, management,
reporting and verifcation of an organisation’s
GHG inventory.
The 1997 Kyoto Protocol is an interna- •
tional agreement linked to the United Nations
Framework Convention on Climate Change.
The major feature of the Kyoto Protocol is
that it sets binding targets for 37 industrial-
ised countries and the European Union for
reducing GHG emissions. Countries must
meet their targets primarily through national
measures. However, the Kyoto Protocol offers
countries an additional means of meeting
their targets by way of three market-based
mechanisms: emissions trading (“the carbon
market”), clean development mechanism and
joint implementation. The Kyoto protocol cov-
ers six greenhouse gases — carbon dioxide
(CO2), methane (CH4), nitrous oxide (N2O),
hydro fuorocarbons (HFCs), per fuorocarbons
(PFCs), and sulphur hexafuoride (SF6).
The United Nations Framework Convention on •
Climate Change (UNFCCC). This international
environmental treaty sets an overall frame-
work for intergovernmental efforts to tackle
climate change. 192 countries have ratifed
the Convention and it entered into force on 21
March 1994.
The 1972 Declaration of the United Nations •
Conference on the Human Environment, or
Stockholm Declaration, was adopted on 16
June, 1972 by the United Nations at the 21st
plenary meeting as the frst document in inter-
national environmental law to recognise the
right to a healthy environment.
Existing initiatives
Carbon Disclosure Project •
EICC Carbon Reporting System for Electron- •
ics Companies, an industry-wide system for
tracking carbon footprint of supply chains.
Greenpeace COOLITCHALLENGE, a cam- •
paign to turn IT industry leaders into climate
advocates and solution providers.
Recommended steps
Comply with all applicable laws, nationally and •
internationally accepted standards on green-
house gases emission reduction, whichever
sets the highest target.
Integrate the measuring, management and •
reduction of GHG emissions and climate
change impacts into mainstream business
processes, by formulating a clear business
case.
Set specifc, concrete GHG emission reduction •
targets, in both absolute and intensity terms.
6

Companies to be specifc about what gases
they attempt to reduce (CO2, PFC or other
gases) and what phases of their supply chain
they are focusing on, their own operations as
well as frst and second tier suppliers.
Transparently and publicly report upon targets, •
efforts and progress of GHG emission – in
all areas of company operations, includ-
ing frst and next tier suppliers. Provision of
aggregate carbon emission estimates, that
is total company emissions. Be clear about
what is included in their GHG data. Data to
be provided in a similar format as provided by
competing companies to allow for comparison
with peers.
Participate in the Carbon Disclosure Project •
and the CDP annual survey.
Participate in the EICC Carbon Reporting •
System for Electronics Companies.
Source items which will help shrink the carbon •
footprint. Choosing less carbon-intensive
products is a good frst step. Work with and
involve suppliers.
Part 3. Environmental aspects 63
Look into capturing and sequestering CO2, •
methane, and other greenhouse gases that
would normally be released to the atmos-
phere.
7
Electronic sector leaders to call upon world •
leaders to deliver a climate saving deal – at the
UN Climate Summit in Copenhagen in Decem-
ber 2009, as well as beyond – and effectively
infuence urgent global climate regulation.
Support for global mandatory reduction of
GHG emissions. Heed the call of Greenpeace’
COOLITCHALLENGE.
Provide products and services to help custom- •
ers (in the supply chain) reduce their emis-
sions.
Training of employees on climate change •
issues.
Facilitation of improvements and GHG reduc- •
tions in other sectors.
Optional: work with tradable Renewable •
Energy Certifcates (REC), also known as
offsets.
6 Greenhouse gas intensity is the ratio of greenhouse gas emissions to economic output.
7 Carbon sequestration is a technique that consists of capturing carbon dioxide from man-made sources and permanently storing it
somewhere other than the atmosphere (eg, terrestrial (biota), oceanic, or geologic sequestration).
Reset. Corporate social responsibility in the global electronics supply chain 64
Issues
Throughout the life cycle of electronic products,
pollution is an issue. For a start, in the extrac-
tives phase pollution is a real concern. In open pit
mining, rocks and soil are simply blasted away
in search of the required metals, producing an
enormous amount of solid waste in the process.
The pursued metal often only accounts for a very
small percentage of the total extracted mass;
to produce one ton of copper, for example, 110
tonnes of solid waste and 200 tonnes of over-
burden are generated. The waste may contain
considerable concentrations of toxic substances
such as arsenic and lead. These are either present
in the upturned soil as natural impurities of the
ore, or may be introduced as auxiliary substances
to facilitate the extraction of the ore. Irresponsible
mining may cause contamination or even the com-
plete depletion of drinking water and other water
sources essential for farming. Air pollution by dust
exhausts is also frequently observed. Forest, farm-
and pasture-lands may be usurped by mining sites
and irrevocably turned into dusty, barren moon
landscapes. When companies close down their
mining operations they often do so without clean-
ing up the land. A problematic aspect concerns
the diffculty in establishing the accountability
of mining companies for collective environmen-
tal impacts, as these are notoriously diffcult to
attribute to one single company (SOMO, 2007).
Hazardous chemicals and materials are amply
used in electronics products. The negative effects
for human health are described in the chapter on
occupation health and safety. Much less is known
about environmental pollution at production
locations. Preliminary research into printed wiring
board (PWB) manufacture, semiconductor chip
manufacture and component assembly, however,
points to highly problematic pollution issues.
The electronics industry has high resource
intensity, in terms of chemicals, energy and water
demands. Hazardous or toxic substances include:
brominated fame retardants (polybrominated •
diphenyl ethers (PBDEs), TBBPA as well as
phosphorus based compounds (including
TPP). Flame-retardants are chemicals added
to a wide variety of materials, including cas-
ings and components of many electronic
goods, to prevent the spread of fre;
phthalates; widely used as plasticizers •
(softeners) in plastics;
certain chlorinated solvents; containing dis- •
solved photoresist mixtures;
photo-initiator related chemicals; •
heavy metals including soluble copper; •
The process of creating circuits utilises com- •
plex photochemistry, ie, exploiting chemical
changes through exposure to ultraviolet (UV)
light. These processes create complex waste
streams that include photoreactive chemicals.
Spent Developing solution is one of the larg-
est liquid waste streams generated by PWB
manufacturing (Greenpeace, 2007).
Irresponsible waste management at production
sites may cause environmental contamination
through discharged wastewaters and sediments
from discharge pipes/channels. Also at the level
of common wastewater treatment plants (WWTP)
that receive wastewaters from different plants
contamination may occur. The discharged waste-
water, even when treated, and treatment sludges/
sediments of WWTPs often contain chemicals or
heavy metals. Treatment processes may be able to
degrade certain chemicals, but they are not effec-
tive at dealing with persistent organic chemicals
and heavy metals in wastewaters. Ground water
pollution is one of the main risks.
Pollution
Part 3. Environmental aspects 65
For some chemicals identifed in waste streams
very little information is available on their toxicity
and environmental properties, presumably largely
as a result of rapidly changing manufacturing
processes and the chemicals employed within
certain sectors. The possible impacts on human
health and the environment due to the use and
release of these chemicals, therefore, remain
largely unknown (Greenpeace, 2007).
In the disposal phase chemicals risk being
released to the environment without ftting precau-
tions. One of the underlying problems is that elec-
tronic products are not designed for recycling. The
lion’s share of the materials in e-waste can hardly
be re-used. Moreover, the methods applied to
dispose of electronic waste are far from sophisti-
cated, and that is not only in developing countries:
plastic shredding, acid processing/leeching, open
burning, residue dumping, land flling, incinera-
tion, stripping. According to the US Environmental
Protection Agency, more than 4.6 million tonnes
of e-waste ended up in US landflls in 2000. Toxic
chemicals can leach into the land over time or are
released into the atmosphere, impacting nearby
communities and the environment. In many Euro-
pean countries, regulations have been introduced
to prevent electronic waste being dumped in land-
flls due to its hazardous content. The exported
waste does still end up in dumps. An estimated
10 to 20 percent of discarded computers in Hong
Kong, for example, go to landflls. Substantial
quantities of toxic heavy metals and organic
compounds are released to the air, soils and water
courses surrounding e-waste dismantling sites.
In Guiyu, China, heavy metals contamination
(cadmium, cobalt, chromium, copper, nickel, lead
and zinc) from printed circuit board recycling may
present a signifcant environmental risk (Leung,
2008). Further substances include tin and organic
contaminants like brominated, chlorinated and
phosphorus based mercury; cadmium; hexava-
lent chromium; polybrominated biphenyl (PBB);
beryllium; gallium; polybrominated diphenyl ethers
(PBDE), and antimony (Greenpeace, 2009).
Standards
Also see chapter on occupational health and
safety.
OSPAR Convention for the Protection of the •
Marine Environment of the North-East Atlantic;
the OSPAR List of Chemicals for Priority
Action (Update 2007); and the OSPAR List
of Substances of Possible Concern (Update
2002, a revised list will be published in 2009).
Existing initiatives
Also see chapter on occupational health and
safety.
Promotion of producer responsibility. A 2006 •
report by Greenpeace and others, based on
existing EPR programmes and anticipated
EPR legislation, demonstrates that EPR laws
– both those mandating substance bans and
setting re-use/recycling targets – do indeed
prompt positive product design change. In
particular, individual producer responsibility
policies turn out to be more effective in creat-
ing incentives for product design change, than
policies requiring collective producer respon-
sibility.’
ISO standard 11469 Plastics -- Generic identi- •
fcation and marking of plastics products.
Recommended targets
Comply with international and national legisla- •
tion or established international standards
regarding pollution, whatever offers the high-
est environmental protection.
Embrace Individual Producer Responsibility •
- as a principle of product policy to address
the lifecycle issues of products – and to show
positive action in getting the own branded
products back for reuse and recycling.
Adopt a chemicals policy that is underpinned •
by the precautionary principle, meaning taking
action to substitute/eliminate a suspect chemi-
Reset. Corporate social responsibility in the global electronics supply chain 66
cal or group of chemicals, even if the scientifc
jury is still out on whether these chemicals are
defnitely causing environmental harm. Imple-
menting a precautionary chemicals policy
requires a system for collecting information on
new suspect chemicals, and mechanisms for
triggering corporate action to phase them out
and begin looking for safer substitutes.
8
Commit to eliminating PVC and all BFRs in •
all applications, with a reasonable timeline by
which phase out will be complete, or to those
who have already fully implemented this com-
mitment.
Commit to eliminating all phthalates; beryllium, •
including alloys and compounds; and anti-
mony/antimony compounds within a reason-
able timeline.
Design for disassembly and recyclability. •
Join the BAN e-Steward initiative or similar •
initiatives in other countries.
Track toxic chemicals on process level, eg, •
by collecting Materials Accounting Data for
each production process, to be able to identify
opportunities for waste prevention and materi-
als effciency (Inform, 1997).
Make lists of restricted/banned substances •
publicly accessible and describe how these
requirements are enforced along the supply
chain. In addition, provide lists of substances
being considered for future restriction or
elimination as well as information explaining
the factors they consider to make these lists
(Greenpeace, 2009).
8 Candidate chemicals for precautionary action are those whose intrinsic properties include carcinogenicity, mutagenicity or reproductive
toxicity, chemicals that are persistent, bio-accumulative and toxic (PBTs) and those that are very persistent and very bio-accumulative
(vPvBs). They can also include substances identifed as having serious and irreversible effects to humans and the environment, for
example certain endocrine disrupting substances (substances disturbing the body’s hormone system) (Greenpeace, 2009).
Part 4.
Economic aspects
Reset. Corporate social responsibility in the global electronics supply chain 68
Issues
One of the factors that contribute to the harsh
working conditions in many sectors in developing
countries is the pressure exerted by companies
throughout the supply chain (retailers and brands
as well as frst and further tier suppliers) on lead
times and prices. This pressure means that sup-
pliers need to speed up production outputs, cut
down on labour costs, and demand longer work-
ing days. This may also cause wages to fall below
the cost of living. This causes social hardships
for the workers concerned (Procure IT fair, 2009).
At the same time, buying companies increasingly
demand their suppliers to comply with labour
standards. This is happening in the electronics
sector as in other sectors. Companies should
address the conficting logic of pursuing lower
prices and shorter delivery times whilst simultane-
ously pursuing compliance with labour standards.
In a competitive market, standards which place
signifcant additional costs on factories may serve
to undermine - rather than support - the type of
improvements that the standards are designed
to bring about. Under pressure to cut costs or to
source suffcient quantities, buyers sometimes
buy from outside the standards they require. This
sabotages the whole relationship, undermin-
ing trust and confdence, leading to mistrust of
standards or a temptation to ‘fake’ compliance
(Traidcraft, 2008). Also, when the buying company
constantly shifts its orders, suppliers may feel
that there is no incentive for making the required
improvements (Clean Clothes Campaign, 2008).
These are consequences of the arbitrary or unfair
use of the purchasing power or infuence of buying
companies, while instead of inhibiting, purchasing
practices should enable suppliers to be decent
employers.
Standards
Unidroits Conventions, including the Conven- •
tion relating to a Uniform Law on the Forma-
tion of Contracts for the International Sale of
Goods.
Initiatives
The Responsible Purchasing Initiative. This •
initiative is coordinated by three European
fair trade organisations and explores how it is
possible to improve the impact of purchasing
activities on the lives of people in developing
countries, by looking at the roles of EU busi-
nesses, public authorities and consumers.
The Chartered Institute of Purchasing and •
Supply (CIPS) is an international organisation,
based in the UK, serving the purchasing and
supply profession. Dedicated to promoting
good practice, CIPS provides a wide range of
services for the beneft of members and the
wider business community.
Recommended steps
Comply with international and national legisla- •
tion or established international standards,
whatever offers the highest social and environ-
mental protection.
Develop an ethical purchasing code and •
integrate responsible purchasing practices into
the code of conduct.
Enter into honest contracts based on the •
Unidroits Conventions.
Establish close cooperation between the inter- •
nal procurement department, the corporate
social responsibility department and suppliers.
Purchasing practices
Part 4. Economic aspects 69
Look into shortening the supply chain with an •
eye to reducing supplier’s transaction costs
Foster continuity in trading relationships with •
individual suppliers. As well as helping with
traceability, knowing their suppliers puts com-
panies in a better position to understand their
problems and work together towards improve-
ments (Traidcraft, 2008).
Develop a contract or memorandum of under- •
standing with suppliers specifying the length
of the relationship or notice period required for
termination of the relationship. This facilitates
trust, loyalty and makes it easier to make posi-
tive long term investments (Traidcraft, 2008).
Regularly assess the positive and negative •
impact of purchasing practices on all workers,
take steps to remediate the negative impacts,
and communicate the results of the assess-
ment and remediation to workers throughout
the supply chain, their representatives, and the
public. Attention should be paid to the impact
of purchasing practices on more vulner-
able groups of workers, including women,
migrants, contract workers and home workers
(Clean Clothes, 2009).
Apply reasonable supply lead times. •
Work out, together with suppliers, what would •
be a minimum sustainable product price. A
sustainable product price enables the supplier
to meet its costs of production, have suffcient
capital for investment, comply with buyers’
standards, and ensure that workers receive a
living wage (Traidcraft, 2008). A minimum sus-
tainable product price adequately supports the
terms and conditions of a negotiated collective
bargaining agreement (CBA). Where no CBA
exists buyers should still follow fair sourcing
and pricing practices such that suppliers are
able to comply with internationally recognised
labour standards and function with a reason-
able enough margin through which meaningful
collective bargaining can take place (Oxfam
Australia and Clean Clothes Campaign, 2009).
Look into the advantages and disadvantages •
of a preferential supplier policy. Explore
incentives for suppliers who respect free-
dom of association and collective bargaining
agreements and processes. These incentives
could include a premium, increased order
volume, long-term commitment to the supplier
and other possible incentives. Incentives for
collective bargaining agreements should only
be applied in cases where the CBA includes a
living wage, adequate limits on working hours
and provision for job security. Such incen-
tives should also only be applied in cases
where the union which negotiates the CBA is
the appropriate collective bargaining agent,
was not formed by management, is not under
external control, and is democratic through
following its own rules (assuming those rules
make the union leadership democratically
accountable to the union’s members and that
all non-management workers at the factory
are allowed to join that union). The process for
checking whether the union meets these crite-
ria needs to be independent, transparent and
credible (Oxfam Australia and Clean Clothes
Campaign, 2009).
Buyers should ensure information on product •
price is available to the union to use in collec-
tive bargaining negotiations. In order for this to
be feasible, both buyers and factory manage-
ment will have to be more forthcoming with
information regarding costs (Oxfam Australia
and Clean Clothes Campaign, 2004).
Buyers should make it clear to government •
authorities they are prepared to ensure a fair
product price is paid which leaves room for
meaningful collective bargaining at the factory
level.
Reset. Corporate social responsibility in the global electronics supply chain 70
Issues
Millions of workers throughout the world work
in Export Processing Zones, also known as
Maquiladoras, Free (Trade) Zones, Free Ports,
Special Economic Zones, economic and technol-
ogy development zones, or high-tech industrial
development zones. Whatever the precise name,
such zones are designated industrial areas of a
country where government regulation, taxes and
trade tariffs are lifted or dramatically reduced in an
effort to attract foreign investment. The concept of
EPZs is not a new one, but since 1995 there has
been an increase in the number of countries with
EPZs, in the overall number of EPZs, and in the
number of workers employed there. It is estimated
that there are currently approximately 3,500 EPZs
throughout the world, operating in around 130
countries and territories and employing around 66
million people (ILO InFocus, 2008). EPZs provide
special economic incentives such as customs-
free, tax-exempt and export-oriented manufactur-
ing facilities and investment incentives, stream-
lined administration, cheap utilities and better
infrastructure than outside the zones. Moreover,
in a few countries, EPZs are given exemptions to
national labour law regulations. The lack of regula-
tion in EPZs comes at a great cost to workers’
rights, health and safety, environmental standards
and social protections.
Increasingly, electronics manufacturing is found in
EPZs.
In law and in practice, freedom of association
and the right to collective bargaining are at risk in
EPZs. Whether this threat is brought about by law
or by a lack of enforcement of existing laws, the
result for workers is the same. EPZs are often set
up in economically deprived areas where labour is
cheap and workers are more fearful of losing their
jobs if they make demands. The workers pool gen-
erally has a large share of women workers, migrant
workers, young workers and temporary workers.
In short, workers in precarious employment posi-
tions. Largely unorganised, these workers have
little or no access to unions. In some cases, physi-
cal barriers in the form of fencing, gates, guards
and razor wire prevent union organisers from
making contact with workers. An absence of trade
unions, with their pressure to improve wages and
working conditions, is indeed one of the factors
that attract companies to locate factories in EPZs
and as a result Export Processing Zones now
provide the most radical examples of employer
opposition to union membership (Holdcroft, 2009).
A recent survey has compiled information on a
number of issues pertaining to zones, such as
legal restrictions on unionisation and union mem-
bership, blacklisting of union offcials, interference
in the affairs of workers’ organisations, refusal
to negotiate, harassment, violence and reprisals,
legal restrictions on industrial action including its
prohibition by classifying EPZs as essential serv-
ices, as well as exemptions and ambiguity
Export Processing Zones
When the Malaysian government set up EPZs, it banned the formation of national unions in the
electronics industry as an incentive to foreign electronics companies to invest in the development
of that sector. According to the Trade Union Advisory Committee to the OECD (TUAC), 96 per cent
of all workers in seven EPZs in Malaysia are employed by foreign transnationals, and electrical and
electronics frms account for 65 per cent of all EPZ employment (Holdcroft, 2003). Today there is still
no national electronics union in Malaysia.
Part 4. Economic aspects 71
regarding the application of labour law and access
to zones (ILO InFocus, 2008).
There is discrimination in terms of pay equity and
equal treatment between male and female EPZ
workers. Although the rights of pregnant women
and young mothers are generally respected, dis-
criminatory practices still persist (such as refusal
to hire pregnant women, job losses and failure to
grant maternity leave).
In most EPZs, migrant workers are more likely
than local workers to be victims of discrimination.
Because of language barriers and restrictions
imposed by employers, immigrant workers are
even more diffcult for unions to organise than
local workers.
The rights of workers regarding recruitment and
dismissal are often not respected. Recruitment is
not always formally organised. Firms have been
known to close without warning within the zones,
leaving workers without compensation, back-pay
or national insurance payments. There are an
increasing number of complaints regarding non-
payment towards provident funds.
In countries across the world, including China,
Indonesia and Madagascar, EPZ workers tend to
work longer hours than workers in other sec-
tors of the economy, often in violation of national
law. Excessive overtime is linked to the nature
of many industries in EPZs or to a global chain’s
requirements. Firms have seasonal demand peaks
and may need their staff to work longer hours to
compensate for defect rates or to comply with
shipping deadlines. Overtime is often mandatory
and refusing to extend working hours may lead to
dismissal or other forms of retaliation. Long and
unpredictable hours have an impact on the ability
of workers to combine paid work and domestic
obligations.
Labour administrations often do not have enough
resources, in terms of either staff or transport,
to address non-compliance with labour laws, to
minimise labour disputes or to carry out regular
inspections in the zones. They may even be dis-
couraged from entering the zones.
Many countries see export promotion as an
important policy for economic growth in develop-
ing countries. Various measures are being adopted
by the governments in these countries to promote
export competitiveness. EPZs have generated
employment, but they do not automatically lead to
sustainable social development and poverty alle-
viation. EPZs increase the dependency of devel-
oping countries on foreign capital and can create
unfair competition with domestic industries, which,
There are three types of employees hired in the Export Processing Zones of Batam, Indonesia. The
most exploited worker is an ’outsourced worker’. They are hired through a labour agency and usually
sign a contract with the agency which holds them liable should they lose their job, sometimes at fees
5 to 10 times their normal wage. These employees are traded like commodities, one step removed
from human traffcking. Should they get ill, pregnant or hurt on the job, the company will immediately
release them and the labour agency will likely fne the employee for breach of contract. Trade union
FSPMI has been successful in negotiating an end to all of these types of contracts for outsourced
employees. In FSPMI plants, these contracts no longer exist. ’Contract Workers’ are generally hired
by the principal company or recruited by an intermediary but contracted with the company directly.
Contracts range from three months to two years. By law, after three years of contracted work, work-
ers should be hired permanently by the employer. Trade unions Lomenik and FSPMI have both been
successful in using this unforced law to make companies change the status of workers after three
years. This has been largely due to positive outcomes for the unions in the courts on this issue. ’Per-
manent workers’ make up a very small minority of workers. Many of these jobs are staff positions
and at management level. These workers tend to make more money through annual raises and have
better benefts (Ivanou, 2008).
Reset. Corporate social responsibility in the global electronics supply chain 72
unlike the foreign frms, cannot import inputs duty
free. Backward linkages also seem to be minimal,
with domestic orders remaining at a low level and
technology spillovers rare (ILO InFocus, 2008).
The labour rights issues described here do not
uniquely occur in EPZs; to a large extent the same
concerns apply in electronics manufacturing out-
side these zones. It should be recognised that the
situation in EPZs will not improve signifcantly until
the overall employment conditions – in particular
with regard to the right to freedom of association
and collective bargaining – in the larger domestic
economy are improved.
Existing initiatives
The InFocus Initiative on export processing •
zones created by the ILO Governing Body.
The key issue is the examination of what
constitutes the most appropriate policy pack-
age to encourage a steady improvement in
the quality of production and employment in
manufacturing sectors competing on global
markets. Using social dialogue and a rights-
based approach, the Initiative will seek to
foster effective, coordinated national policies
on decent work, which encourage investment
and trade and promote core labour standards
and adherence to national laws. Specifc
attention will be paid to the gender dimension
of decent work.
Recommended steps
Ensure that internationally accepted labour •
rights are respected throughout the supply
chain, including in EPZs, in particular the right
to organise and to bargain collectively.
Facilitate and promote the proper functioning •
of the labour inspection.
Improve information fows to workers, employ- •
ers and governments through social dialogue
and collaboration among stakeholders, includ-
ing workers, employers, ministries of labour,
economy or trade and industry, EPZ authori-
ties and labour inspectors.
Part 4. Economic aspects 73
Issues
Tax issues are relevant throughout the electronics
value chain. In the mining phase, non-transparent
or secret mining contracts between governments
and companies are common. Both governments
and mining companies in some cases refrain
from publishing data on revenues, import, VAT,
royalties, profts, etc In the manufacturing phase,
key issues are the payment (or non-payment) of
corporate income taxes and the lack of transpar-
ency regarding taxes.
Governments need tax revenues for investments
in public goods and services like infrastructure,
education, health care and a social safety net.
These investments are of great important for
national welfare, a good enabling environment
for the private sector and for economic develop-
ment in general. It is important that all individuals
and frms, who are benefting from these public
services, contribute to this by paying a fair share
in taxes (Tax Justice Network, 2009).
Whether corporations pay or evade taxes is an
important part of how they affect the communities
in which they operate. As such, corporate tax poli-
cies along with social and environmental policies
should be considered as a corporate responsibility
issue (International Budget Project, 2006).
Most income taxes are designed to spare people
or businesses with incomes below a certain level.
However, special exemptions or deductions are
also provided to wealthy individuals and business-
es, sometimes with the stated goal of encouraging
certain activities (such as investing in a particu-
lar sector of the economy), sometimes simply
because these powerful groups were able to
infuence the political process. But when wealthy
individuals and businesses are able to evade taxes
it leads to a less equitable tax system. The special
exemptions and deductions require higher tax
rates on everyone else to raise the same level of
revenue, thwarting the goal of a graduated income
tax (International Budget Project, 2006).
Often, companies pay no tax or receive a refund,
even though they are proftable. It occurs that
companies report higher profts to their share-
holders than to the tax offce (Internal Revenue
Service), sheltering part of their profts from the tax
collector. Much of this sheltering occurs as a result
of tax breaks that have been explicitly enacted
into law, such as a generous depreciation allow-
ance, but some also refects the use of offshore
tax havens (International Budget project, 2006).
Problems arise when individuals and businesses
take advantage of loopholes and ambiguities in
the tax law in order to avoid taxes. While these
types of schemes may be technically legal,
aggressive tax avoidance violates the spirit of the
law by exploiting unintended loopholes.
Taxation
African governments are deprived of millions of dollars as many contracts signed with governments
remain secret, with mining companies using this secrecy to pursue aggressive tax avoidance strate-
gies. Mining companies use various methods to pay as little tax as possible. These include forcing
governments to grant tax subsidies and concessions by threatening to go elsewhere if they are not
forthcoming and using false accounting to enable companies to artifcially depress profts in the
countries where they operate in order to evade tax (ActionAid, 2009).
Reset. Corporate social responsibility in the global electronics supply chain 74
Moreover, tax avoidance can easily cross over into
tax evasion, or the illegal non-payment or under-
payment of taxes (International Budget Project,
2006).
Globalisation has made it increasingly diffcult
for tax administrations in developing countries to
collect taxes from multinational corporations. For
example, the existence of tax havens around the
world helps wealthy individuals and multinational
companies (as well as criminals and corrupt lead-
ers) move their wealth and profts offshore to avoid
paying tax. The Tax Justice Network estimates
that governments worldwide lose some $255
billion in tax revenues each year as a result of tax
havens (International Budget Project, 2006).
It has been estimated that more than half of all
world trade is going through tax havens to avoid
taxation. Tax havens play an important role in the
worldwide problem of tax avoidance and eva-
sion. Secret bank accounts and offshore trusts
in tax havens provide companies with the means
to escape their tax obligations. Multinationals’
ability to substantially lower their tax burden by
routing capital fows through mailbox companies
in tax havens provides them with unfair competi-
tive advantages vis-à-vis their – often smaller –
competitors in developing countries (Tax Justice
Network, 2009). Multinational corporations are
particularly competent at avoiding taxes.
Wealthy individuals and businesses tend to beneft
the most from weak tax administration, since they
owe the most in taxes and are better able to struc-
ture their affairs (or pay bribes) to evade the tax
system. If the wealthy escape taxation, then other
taxpayers, including lower-income people, bear
more of the burden and the potential for reducing
inequality through the tax system is reduced (Inter-
national Budget Project, 2006).
Tax preferences reduce or eliminate taxation of
selected goods or activities in order to make them
more attractive. Tax preferences can be used to
encourage companies to invest in a particular
geographic region or sector of the economy or
in worker training or high-technology equip-
ment. Because tax expenditures shrink the tax
base, they reduce revenue collection. A problem
also occurs when a tax break that is intended to
change behaviour instead merely rewards people
or businesses for actions they would have taken
even without the tax incentive. For example,
developing countries frequently offer tax breaks
to attract foreign investment. Yet research shows
that companies generally base their investment
decisions on factors other than tax policy. As a
result, such tax expenditures reduce revenues
but may do little to infuence foreign investment.
Also, businesses may exaggerate the potential
economic gains of certain tax breaks—such as tax
incentives designed to encourage investment (Tax
Justice NL, 2009).
Foreign direct investments are often viewed as a
stimulus for development because of the spread
of technological knowledge, newly created
employment, tax revenues and other economic
advantages. A lot of countries try to attract foreign
companies by offering favourable tax rates. It also
occurs that countries provide tax exemptions
(such as tax holidays) to attract certain corpora-
tions. This has led to increased tax competition
between countries.
Companies view taxes as costs and use their
strong negotiation position to convince countries
to offer more favourable tax rates. In some cases
multinationals make countries compete with each
other on decreasing tax rates. Internationally,
this has lead to lower tax rates for companies;
in Europe, statutory corporate tax rates have
dropped considerably over the last decades.
The impressive private profts of Nokia come at a high price for the public. The special agreement
between Nokia and the Tamil Nadu state government (India), signed in 2005, ensures the government
will refund VAT on domestic sales to the value of Nokia’s investments in infrastructure. This means it
is actually the state government which is paying for the company’s infrastructure (Citizens’ Research
Collective on SEZ, 2009).
Part 4. Economic aspects 75
Developing countries also increasingly offer tax
exemptions to attract investments.
Tax competition between countries has negative
consequences for international development and
undermines economic development in different
ways. Foreign companies insist on large tax ben-
efts or tax exemptions, which they often receive.
This means that multinationals gain an unfair
tax beneft over local companies. Tax competi-
tion results in a ‘race to the bottom’ of countries
that want to attract investments. Some countries
will try to offer lower taxes than their competi-
tors, while the competing countries will try to do
the same. In the long term, this undermines inter-
national development. In all, tax competition is a
complex problem, because countries are keen to
attract foreign investments. It is, however, doubt-
ful whether tax incentives are the right means to
reach this goal (Tax Justice NL, 2009).
Tax exemptions together with lowered tariffs (trade
liberalisation) result in limited tax revenues for gov-
ernments. This means that less budget is available
for investments in public goods en services, like
education, health care and infrastructure.
Another important aspect is the resource outfow
in the form of capital fight, tax avoidance and tax
evasion. Developing countries are losing $500bn
to $800bn in untaxed money that is leaving their
economies unchecked. This fight of capital is up
to 10 times the $78bn that developing countries
currently receive in aid. By far the biggest leak
is the widespread and pernicious mispricing of
exports and imports to shift profts out of the
country (Kapoor, 2005).
Environmental taxes are an example of how taxes
can be used to put a price on activities that are
considered harmful for society as a whole. For
instance, a manufacturing plant may emit pol-
lutants that have high environmental and health
costs, but that impose little or no monetary cost
on the manufacturer.
Standards
The Extractive Industries Transparency initia- •
tive (EITI) sets a global standard for trans-
parency in oil, gas and mining. The EITI is a
coalition of governments, companies, civil
society groups, investors and international
organisations, and a standard for companies
to publish what they pay and for governments
to disclose what they receive. The EITI, in a
nutshell, is a globally developed standard that
promotes revenue transparency at the local
level. In its principles, the EITI underlines the
importance of high standards of transparency
and accountability in public life, govern-
ment operations and in business; as well of
transparency by governments and companies
in the extractive industries and the need to
enhance public fnancial management and
accountability.
OECD Convention on Combating Bribery of •
Foreign Public Offcials in International Busi-
ness Transactions.
Existing initiatives
The Tax Justice Network promotes transpar- •
ency in international fnance and opposes
secrecy. TJN supports a level playing feld on
tax and opposes loopholes and distortions in
tax and regulation, and the abuses that fow
from them. TJN promotes tax compliance
Nokia sells its phones mainly within India but still manages to get these counted towards export.
While some of Nokia’s goods are sold within India, this is still counted towards the company’s
export earnings. With the inclusion of telecom items in foreign exchange earnings, Nokia can sell its
products anywhere, in India and abroad and still count as a Net Foreign Exchange earner for India.
NFE needs to be positive for a Special Economic Zone unit to continue receiving central government
benefts under the SEZ Act (Citizens’ Research Collective on SEZ, 2009).
Reset. Corporate social responsibility in the global electronics supply chain 76
and opposes tax evasion, tax avoidance, and
all the mechanisms that enable owners and
controllers of wealth to escape their responsi-
bilities to the societies on which they and their
wealth depend. Tax havens lie at the centre of
our concerns, and TJN opposes them.
Tax Justice NL is a network of Dutch civil soci- •
ety organisations. The purpose of Tax Justice
NL is to promote a just and fair tax system that
is supportive to international development.
The network hopes to infuence Dutch politics,
so that Dutch tax policies will become more
coherent with development cooperation. Tax
Justice NL was offcially launched during the
start conference on the 10th of May 2007.
Publish What You Pay (PWYP) is a global •
civil society coalition that helps citizens of
resource-rich developing countries hold their
governments accountable for the manage-
ment of revenues from the oil, gas and mining
industries. Natural resource revenues are an
important source of income for governments
of over 50 developing countries. When proper-
ly managed these revenues should serve as a
basis for poverty reduction, economic growth
and development rather than exacerbating
corruption, confict and social divisiveness.
PWYP argues for transparency of company
payments and government revenues as well
as of contracts and licensing procedures.
The Global Reporting Initiative (GRI) has •
developed a widely used sustainability report-
ing framework which sets out the principles
and indicators to measure and report their
economic, environmental, and social perform-
ance. The cornerstone of the framework are
the Sustainability Reporting Guidelines. In the
Economic Indicator Protocols Set (EC) the
meaning of Economic Value Generated and
Distributed (EVG&D) is defned as including
revenues, operating costs, employee compen-
sation, donations and other community invest-
ments, retained earnings, and payments to
capital providers and governments. GRI also
provides detailed Guidance on EVG&D Table
Line Entries (2.2). Where it concerns Payments
to governments (2.2.e.), companies should
provide data concerning all company taxes
(corporate, income, property, etc) and related
penalties paid at the international, national,
and local levels.
Recommended steps
Include ethical corporate tax policies in CSR •
policies.
Ensure corporate tax policies include stand- •
ards for tax payments with tax compliance as
bottom line.
Avoid proft-shifting mechanisms that are •
without substantial economic purpose and are
used solely to reduce taxes.
Publicly report on tax policies, the countries •
where companies operate, the profts derived
from respective operations, where profts
are booked for tax purposes; tax payments
and accounting information – as part of CSR
reporting. With regards to reporting on pay-
ments made to governments, Publish What
You Pay as well as the Global Reporting Initia-
tive provide useful standards.
Build enhanced relationship with tax authori- •
ties.
Refrain from bribery and corruption practices. •
Part 4. Economic aspects 77
Issues
In the electronics industry, trading relations are
not necessarily fair and benefcial for all parties
concerned. An unfortunate poignant example of
twisted relations is the trade in electronic waste.
Electronic waste is routinely exported by devel-
oped countries to developing countries where
laws to protect workers and the environment are
inadequate, or not enforced. These trade practices
are often in fagrant violation of international law.
The reasons behind the export of e-waste are
manifold. First, it is cheaper to ‘recycle’ waste
in developing countries; for example the cost
of glass-to-glass recycling of computer moni-
tors in the US is ten times higher than in China
(Greenpeace, 2009). It may cost €10 to recycle a
computer in Sweden, while it can be taken apart
by Indian informal waste workers for a mere €1.50
(Swedwatch, 2009). Second, e-waste producing
countries lack the facilities or know-how to prop-
erly dispose of the quantity of hazardous e-waste
that is currently produced. Third, there is a market
for waste. Demand in Asia for electronic waste
started growing when scrap yards found they
could extract valuable substances such as copper,
iron, silicon, nickel and gold, during the recycling
process. In other words, there are immense profts
to be made by participants in the fourishing toxic
trade. A mobile phone, for example, is 19 percent
copper and eight percent iron (Greenpeace, 2009).
Also, regulations are few and poorly enforced.
In the US there is very little regulation of e-waste.
Less than 20 percent of US e-waste is recovered.
Recycling percentages for PCs (10 percent) and
TVs (14 percent) are even lower. The 2009 switch
to digital TVs in the US and elsewhere will lead to
a massive increase in the number of redundant
analogue TVs. Much of the collected e-waste is
exported; export of collected e-waste is allowed
in the US.
In Europe, however, export of waste from electrical
and electronic equipment (WEEE) to develop-
ing countries is banned according to European
legislation (the Waste Shipment Regulation), due
to the presence of components that risk damag-
ing human health and polluting the environment.
Despite this regulation, 75% of European e-waste
is unaccounted for. Of the estimated 8.7 million
tonnes of e-waste created annually in the EU
a massive 6.6 million tonnes of e-waste is not
recycled. Presumably, much of this waste will be
exported (Greenpeace, 2009).
In 2000 and 2002, China introduced legislation
prohibiting the import of e-waste. India has done
the same, but this legislation contains many loop-
holes. Also Indonesia and Vietnam have decided
to prohibit import of e-waste. However, these laws
do not seem to be effective yet; e-waste is still
arriving at Guiyu of Guangdong Province, the main
centre of e-waste scrapping in China, as at many
other destinations (Greenpeace, 2009).
Trade and dumping
In 2008, the Dutch Ministry of Transport, Spatial Planning and the Environment (VROM) has carried
out extensive research among 25 European countries into the illegal transport of waste. After analy-
sis of 74 cases of illegal shipments, Waste Electrical and Electronic Equipment (WEEE) comes out
as the most important waste stream (21 cases). The most frequent violations are waste shipped as
product, and contamination (VROM, 2008).
Reset. Corporate social responsibility in the global electronics supply chain 78
There is a great need for computers and other
information technology in many African countries.
These products may help the so-called digital
divide. The export of second hand electronics
equipment may contribute to quenching this need,
by increasing poor people’s access to electronics.
This will furthermore prolong the lifespan of such
products, which is good from an environmental
point of view. It has negative consequences as
well, however, as the fnal disposal of this stuff will
occur in countries where proper recycling systems
are lacking. Increasingly, brands and retailers in
the US and Europe are held to take-back obsolete
electronic products; this does not (yet) apply for
second hand products that end up in developing
countries.
Some exporters of e-waste attempt to cover up
their illegal shipments by mis-labelling them as
‘products for reuse’ or ‘donations’. It appears
that at present Hong Kong, China, Singapore
and Malaysia are the main recipients in Asia. In
Africa, Nigeria and Ghana are the main destina-
tions. Countries in the Middle East may receive
shipments or function as transit. Also, trade routes
tend to change, as traders try to escape strength-
ened control and the spotlight of the media
(Swedwatch, 2009).
Even well intentioned shipments of computers for
reuse are being abused. In Ghana, for example,
traders report that to get a shipping container with
a few working computers they must accept broken
junk like old screens in the same container from
exporters in developed countries (Carroll, 2008).
The broken junk and eventually even the working
computers inevitably end up on dumps, as Ghana
lacks the infrastructure to safely recycle toxic
e-waste. Some developing countries are trying to
curb the fow of second-hand goods by requiring
age-limits for different products.
Standards
Directive 2002/96/EC of the European Parlia- •
ment and of the Council of 27 January 2003
on waste electrical and electronic equipment
(WEEE).
The Basel Convention on the Control of •
Transboundary Movements of Hazardous
Wastes and their Disposal, adopted on 22
March 1989. The Convention was initiated in
response to numerous international scandals
regarding hazardous waste traffcking that
began to occur in the late 1980s. As of 1 Janu-
ary 1998, the Basel Ban decision effectively
bans all forms of hazardous waste exports
from member countries of the Organization
of Economic Cooperation and Development
(OECD) to all non-OECD countries.
Globalisation has added another dimension to waste trade and e-waste occupies centre stage of this
trade. Large volumes of e-waste are being traded globally though in many cases illegally, and India
is viewed as one of the most preferred destinations for outsourcing for the reverse manufacturing
process of e-waste. Availability of cheap labour and weak environmental laws are largely responsible
for the proliferation of such illegal trade. Subsequent to the WEEE Directive in the EU and the State
laws in fve States of US, India receives large amount of electronic waste for recycling and treat-
ment from these countries. Lack of understanding of national policies on import export and porous
ports at both the points of origin and the fnal destination also add to the volumes being traded. As
the trade opportunities grow the traders and recyclers resort to newer methods and approaches in
import-export of such materials. It is very unfortunate that the burden of such hazardous processing
is passed on from the most developed world to the most marginalized communities of the develop-
ing countries (Toxics Link, 2007)
Part 4. Economic aspects 79
Existing initiatives
The Basel Action Network is dedicated to •
preserving and implementing the Basel Ban
(which is still under attack and needs to be
protected against efforts at sabotage). BAN is
advocating ratifcation of the Basel Ban, as for
the amendment to enter the force of law it will
need to be ratifed by 62 of the Basel Parties.
Recommended steps
Comply with international and national legisla- •
tion or established international standards,
whatever offers the highest environmental
protection.
Manufacturers and retailers of electronics •
equipment should prevent obsolete products
going to recyclers who will export them to
developing countries.
Set up take-back and recycling systems that •
support branded end-of-life product differen-
tiation.
Aim for high collection and take-back levels •
(eg, above 95% of all e-waste generated), at
least of own branded waste.
Provide free, easy and global take-back and •
recycling services for all branded discarded
products, both for business and individual
customers, in every country where products
are sold.
Contribute to the costs of pre-testing and •
labelling of waste exports.
Support developing countries in curbing the •
imports of fake second hand goods by con-
trolling age-limits set in EU harbours.
Reduce the hazardous content of electronic •
equipment.
Authorities to allocate resources to inspect •
electronics shipments at their borders.
Make consumers aware of the need to respon- •
sibly recycle their obsolete electronics.
Reset. Corporate social responsibility in the global electronics supply chain 80
Issues
As a principle, companies should operate with
honesty in their business affairs, marketing,
advertising and their dealings with consumers.
Companies are to uphold the safety and quality
of the goods and services they provide. Deci-
sions made with regards to selling practices on
the retail market can increase price pressure on
competitors, and as a consequence have an
impact on environmental and labour conditions
down the supply chain. There is a clear relation
between retailer pricing, purchasing practices and
compliance to labour and environmental standards
throughout the supply chain.
Increasingly, consumers are interested in sustaina-
ble products. Companies and governments are to
create the enabling parameters for such sustain-
able consumption.
Consumer have the right to know the origin of the
products they consume and the way these are
produced. This included the sources of compo-
nents and raw materials. Product information
and labelling are key in this respect. Consumers
organisations have been calling upon companies
to provide consumers with transparent and com-
prehensible information.
Obsolete electronics equipment should be pro-
perly recycled. Retailers and brands, as well as
consumers, have a responsibility. The concept
behind Producer Take-Back or Extended Producer
Responsibility (EPR) is that if consumers require
electronics producers to take fnancial respon-
sibility for the disposal of their old and obsolete
products, these companies have greater incentive
to design toxic-free electronics that are cheaply
and easily recycled. This not only alleviates the
consumer and taxpayer burden, but it potentially
diverts millions of pounds of e-waste from being
dumped or burned. Producer Take-Back man-
dates that e-waste is recycled responsibly and
not exported to impoverished countries or sent
to prisons for dismantling. Because of consumer
demand, electronics companies are slowly starting
to facilitate the responsible recycling of their old
products. Dell, HP and Apple have take-back
policies enabling consumers to send back their
old equipment when they purchase a new product.
Informing consumers of such schemes and faci-
litating them to use them, is part of a responsible
marketing and retailing approach.
Not to add even more to the streams of waste,
smart packaging is required.
Marketing and retailing
practices
The mobile network operators’ position in the supply chain of mobile communication products is
particularly crucial since they are an important retail channel of mobile phones for consumers. It is
common practice for mobile network operators to offer customers a “free” new mobile phone when
they sign up for a new subscription, or renew their subscription. Evidently, this type of marketing
has an enormous impact on the amount of mobile phones that are circulating on the market, as well
as on the mobile phone production processes, and the mounting volumes of e-waste. Because the
network operators are an important retail channel, even though their core business is the sale of
services (ie the use of mobile network technology) instead of products (ie mobile phones), they have
the unique opportunity to infuence CSR policies and practices throughout the mobile phone supply
chain, without harming their own sales of services. (makeITfair, 2009).
Part 4. Economic aspects 81
Connected to the irresponsible handling of elec-
tronic waste, there is also the issue of privacy of
information. When discarded computers and other
electronic equipment are not carefully disposed
off, intimate details of people’s lives like pictures
and fles left behind by the original owners on the
hard disk drive, for example, as well as priva-
te fnancial data such as account information,
records of online transactions, credit card num-
bers etc. can be retrieved. It is not just individuals
who are exposed, but also companies, public ins-
titutions, governments etc. At the moment, elec-
tronics waste is shipped and dumped to a number
of places that are not offering a particularly secure
environment for safe handling of waste. Ghana, for
example, is listed by the U.S. State Department as
one of the top source of cyber crime in the world.
Worldwide the risk of identity theft is increasing.
Consumers have the right to be protected against
such risks.
Standards
The UN Guidelines for Consumer Protection 1999
cover eight basic principles:
the right to access necessary goods and •
services;
right to safety; •
right to information; •
right to choice; •
right to be heard; •
to appeal and lodge a compliant; •
consumer education; •
promotion of sustainable consumption; •
patterns.
Existing initiatives
The Basel Action Network initiated e-Stewards •
recyclers are a group of leading North Ameri-
can electronics recyclers and asset managers
who have been qualifed as upholding the
highest standard of environmental and social
responsibility. The criteria include no toxic
e-waste dumped in landflls or incinerators,
exported to developing countries, or sent to
prison labour operations and no release of
private data.
The Electronics TakeBack Coalition (ETBC) •
promotes green design and responsible recy-
cling in the electronics industry. ETBC’s goal
is to protect the health and well being of elec-
tronics users, workers, and the communities
where electronics are produced and discarded
by requiring consumer electronics manufac-
turers and brand owners to take full respon-
sibility for the life cycle of their products,
through effective public policy requirements or
enforceable agreements.
Consumers International (CI) is a global •
campaigning voice for consumers. With over
220 member organisations in 115 countries, CI
is building a powerful international consumer
movement to help protect and empower
consumers everywhere. In the series ‘The real
deal. Exposing unethical behaviour.’, CI has
published a number of reports, informing con-
sumers of labour and environmental issues in
the global electronics supply chain.
Ethiscore is the consumer interface of the Ethi- •
cal Consumer Research Association (ECRA).
ECRA was founded in 1988 as a not-for-proft
workers’ co-operative to ‘provide information
on the companies behind the brand names
and to promote the ethical use of consumer
power.’ ECRA is encouraging purchasers to
take environmental and social issues into
account in the market place.
Recommended steps
Set retail prices in a responsible manner; •
refrain from stunting and selling products at
below-cost retail prices.
Brand companies to forbid retailers stunting •
with their products.
Refrain from advertising that creates consum- •
er expectations of unsustainably low prices
(Clean Clothes campaign, 2009).
Facilitate responsible consumption (ie, less •
Reset. Corporate social responsibility in the global electronics supply chain 82
consumption), eg, refrain from offering irresist-
ible short term mobile network subscription
packages with cheap or free products.
Provide consumers with reliable informa- •
tion about the origin and the production of
electronic equipment, including sources of
components and raw materials.
Inform consumers on the global amount of •
recycled e-waste as a percentage of past
sales by product type (Greenpeace, 2009).
Minimise on packaging material and offer elec- •
tronic equipment in recycled and recyclable
packaging material
Retailers to link up to responsible recyclers •
who meet the highest standards in electronics
recycling.
Set up or reliable free and easy take-back •
systems for all electronic equipment in all
countries where products are sold.
Publish clear information on what individual •
consumers can do with e-waste and make
it accessible to customers in every country
where products are sold.
Brands and retailers to ensure their respective •
codes of conduct correspond on these points.
Part 4. Economic aspects 83
Issues
Public institutions are an important customer
of electronic products, ranging from computers
to communication equipment, including mobile
phones. As such, public institutions including local
administrations, universities, libraries etc, have a
critical market share that can infuence develop-
ments towards social and ecological goals in the
electronics sector. Or, in other words, irresponsible
procurement practices in public institutions are
reinforcing the trend towards low priced products
at any cost, putting unreasonable pressure on
wages, working days and lead times in supply
chains. The challenge is how to integrate envi-
ronmental and social considerations into public
procurement procedures. Tendering procedures
typically look for the cheapest offer, leaving social
and environmental criteria behind. The inclusion of
environmental criteria in public tenders, or green
public procurement, has grown somewhat in use
over the past years. Many goods come with labels
certifying their environmental standards. There are
public databases where suppliers offer information
about themselves and their products. Nonethe-
less, generally speaking managers and profession-
als are still largely ignorant of ‘green IT’, as shows
a regularly updated assessment among business
and administration professionals in the Nether-
lands (Ernst&Young, 2009).
The insertion of social considerations in tenders
for electronics equipment is in an even more
rudimentary stage. Public institutions can make
a positive contribution to improved working
conditions in the production chain of electronics
products by using their buying power. To do so,
labour conditions should also be made a factor
when purchasing electronic products. Increasingly,
governments are taking steps towards enabling
sustainable public procurement.
Standards
Directive 2004/18/EC of the European Parlia- •
ment and of the Council on the coordination
of procedures for the award of public works
contracts, public supply contracts and public
service contracts.
Directive 2004/17/EC of the European Parlia- •
ment and of the Council of 31 March 2004
coordinating the procurement procedures of
entities operating in the water, energy, trans-
port and postal services sectors.
Existing initiatives
Procure IT Fair is a coalition of NGOs from •
various European countries that intends to
raise awareness on the working conditions
and environmental pollution created by the
production of computers. ProcureITfair asks
politicians and public purchasers to use their
(buying) powers to demand compliance with
Public procurement
In 2008, the Swiss city of Zurich issued a call for tender for a framework contract for computer hard-
ware. For this contract, the ILO labour standards were included in both the award criteria and the
contract clauses. The sustainability criteria were given a prominent place among the award criteria,
with a weight of 18%. The framework contract required tendering companies to adhere to the ILO
labour standards, under penalty of a fne or annihilation of the contract.
Reset. Corporate social responsibility in the global electronics supply chain 84
international labour rights and ecological
standards in the global supply chain of com-
puters. ProcureITfair has elaborated Criteria
for sustainable procurement of IT products.
Procura+ is an initiative by ICLEI (local govern- •
ments for sustainability) designed to help
support public authorities in implementing
Sustainable Procurement – and help promote
their achievements.
The United Nations Environment Programme •
(UNEP) has published Sustainable Procure-
ment Guidelines for Offce IT Equipment.
EPEAT is a system that helps purchasers •
evaluate, compare and select electronic prod-
ucts based on their environmental attributes.
The system currently covers desktop and
laptop computers, thin clients, workstations
and computer monitors.
The European Commission has set a politi- •
cal target of 50% Green Public Procurement
(GPP) to be reached by the Member States
by the year 2010. The target is linked to a
process for setting common -voluntary- green
public procurement criteria, recommended for
inclusion in tender documents for a series of
priority product and service groups, including
IT offce equipment and mobile phones (under
development).
The Dutch government has decided to include •
sustainability as an important criterion for the
public procurement of products and services
by 2010.
In Austria, ILO standards are included in •
national procurement law.
Recommended steps
Take into consideration the environmental and •
labour conditions in the entire supply chain of
electronic equipment.
Require tendering companies to provide full •
transparency regarding their supply chains;
Avoid purchasing electronic equipment from •
companies that violate human rights, labour
or environmental standards. Suppliers whose
production processes are known to involve
human rights violations or environmental
offences should be excluded from the tender-
ing process. This should also apply when the
violations occur within the supply chain.
Inquire at the bidder about the origin of metals •
used in electronic products, and to set stand-
ards concerning sustainable sourcing.
Take precautions to ensure that the purchas- •
ing of electronics equipment does not lead to
unreasonable pressure on working hours and
wages, by establishing reasonable prices and
lead times.
Ensure sustainable repair, reuse or recycling •
of electronic equipment, after a maximum
lifespan.
Make sure redundant equipment does not end •
up as illegally exported electronic waste to
developing countries by working with reliable
take-back systems.
Part 5.
References
Reset. Corporate social responsibility in the global electronics supply chain 86
ActionAid. Breaking the Curse: How Transparent Taxation and Fair Taxes can Turn Africa’s Mineral Wealth •
into Development. March 2009.
http://www.actionaid.org/docs/breaking%20the%20curse%20full%20report...pdf
Amnesty International. Close the accountability gap. Corporations, human rights and poverty. •
May 2009. http://demanddignity.amnesty.org/campaigns-en/corporate-accountability.html
Apple. Supplier Responsibility 2009 Progress Report. February 2009. •
http://images.apple.com/supplierresponsibility/pdf/SR_2009_Progress_Report.pdf
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A publication that deserves particular mention is:
Challenging the chip - Labor Rights and Environmental Justice in the Global Electronics Industry Eds. T. •
Smith, D.A. Sonnenfeld, D. Naguib-Pellow, L.A. Byster , Temple University Press, 2006.

doc_450714933.pdf