THE TRUTH BEHIND THE BARCODE

Electronics Industry Trends

Electronics
Industry
Trends
19th May 2014
Authors: Gershon Nimbalker, Claire Cremen,
Yolande Kyngdon & Haley Wrinkle
Design: Elin Eriksson, Dwight Gilberg, Tim Park,
Fiona Russell & Haley Wrinkle
Organizations:
Not For Sale & Baptist World Aid Australia
Produced with Support From:
International Labor Rights Forum
THE TRUTH
BEHIND
THE BARCODE:
Visit www.behindthebarcode.org.au
to nd out more.
www.notforsalecampaign.org/australia
International Labor Rights Forum
advises the Free2Work program.
We would like to thank ILRF for its
contributions to this report.
Electronics Industry Trends report
was funded in part by a grant from
the United States Department of
State. The opinions, ndings, and
conclusions stated herein are those
of the author and do not necessarily
reect those of the United States
Department of State.
Research contained in this report was completed over a period of eighteen
months to February 2014. Published 19th May 2014
Introduction | Exploitation and Slavery in Electronics
More than ever before, the world is asking questions about the people
making our electronics and the conditions under which they work. Interest
has been spurred on by the ascendency of global brands like Apple,
Microsoft and Samsung, combined with growing public concern about
exploitation and child labor in Chinese electronics factories, as well as
fears about the use of conict minerals sourced from the Democratic
Republic of Congo (DRC). This report seeks to shed light on these
concerns by examining the eforts of thirty-nine widely-recognised
electronics brands to address exploitation and forced labor within their
supply chains. It is the second in a series of industry-focused reports; the
rst focused on the apparel industry.
Product supply chains are particularly susceptible to the presence
of slavery and exploitation when little or no responsibility is taken by
companies to protect worker rights upstream in the supply chain. On
these grounds, this report grades companies across four categories of
their Corporate Social Responsibility (CSR) practices: policies; traceability
and transparency; monitoring and training, and worker rights. Our
research nds that the electronics industry has substantial room for
improvement as the highest grade awarded was B+ and the median
received was C-.
The sectors greatest strength is the early steps it has taken toward
knowing who makes its products (traceability). Almost half of all the
companies we assessed have traced the majority of suppliers responsible
for their nal stage of manufacturing, and a quarter have done the same
for their components manufacturing. Many brands have also begun to
locate their smelters to ensure the minerals they use have not originated
from the civil war-ravaged Democratic Republic of the Congo.
However, the research shows a clear trend that insufcient eforts have
been undertaken to uphold worker rights, and in particular to ensure
workers are paid a living wage. Of the companies assessed, only Nokia
was able to provide sufcient evidence that its worker rights policies
had translated into increased wages. This is of particular concern given
that payment of a living wage is among the most persistent issues raised
by workers in developing countries and one of the most dependable
measures of improved worker well-being.
We encourage electronics companies to take further steps to trace
their supply chains, monitor them efectively against the use of child
and forced labour and, most importantly, begin publicly reporting the
impact of their CSR policies, in particular, the wage gains of their workers.
Further, we urge the industry to solidify these commitments by creating
legally binding and enforceable agreements with workers. Examples from
the apparel industry include the Accord on Fire and Building Safety in
Bangladesh and the Freedom of Association Protocol in Indonesia.
Electronics companies have great potential to bring substantial benets
to the countries in which they operate. For developing countries, the
investment, technology, job opportunities, skills and tax revenues that
accompany their operations can be critical in helping their citizens
overcome poverty. However, without adequate safeguards many of these
benets will not fully materialise and workers may be exploited or even
enslaved.
This report provides an overview of key labour rights issues afecting the
electronics sector, alongside in-depth company proles and snapshots
of good company practices. The report is a tool for consumers who may
wish to vote with their wallets and advocate for better business practices.
It is a tool for companies to assess their performance and compare their
strengths and weaknesses with those of their peers. It is also a tool for
policy makers to understand where greater governmental oversight is
needed.
1
Company Performance
While no company earned an A grade in this report, B+ grades were
awarded to Nokia, LG, Microsoft and Apple. Apples inclusion in the top
tier may come as a surprise given the public attention it has received
for poor working conditions and child labour at Chinese suppliers like
Foxconn and Pegatron. In fact, Apple itself reported nding eight facilities
using child labour in 2014. This context should provide the reader with
some understanding of the degree to which we graded companies on a
curve. A number of large companies were in the B category, not because
their supply chains are free of abuse, but because they were doing
relatively more to proactively address these issues. These companies
trace and efectively monitor a good portion of their supply chain, with
a few going further to implement grievance mechanisms and policies to
remediate child labour.
Overall company grades are listed to the right.
Introduction | Exploitation and Slavery in Electronics
2
B C
D
F
Companies
that guarantee
above local
minimum wage
Compare
Grades
to Wage
Impact:
ONE
PARTIAL
Nokia
Acer
Apple
Dell
Hewlett-Packard
Intel
LG Electronics
Microsoft
Motorola Mobility
Motorola Solutions
Panasonic
Samsung
Toshiba
Blackberry
Garmin
Hitachi
IBM
Olympus
Philips
SanDisk
Sharp
Sony
TomTom
Woolworths Australia
Amazon Kindle
Asus
Canon
Dick Smith Electronics
Fujitsu
HTC
Huawei
Kogan
Lenovo
Nintendo
Oracle
Soniq
TEAC
Hisense
Palsonic
Introduction | Living Wage & Collective Bargaining
3
Living Wage
Naturally, wages are one of the chief concerns of workers.
Although our research grades companies on their overall
labour rights management systems, it is worth specically
highlighting their wage practices.
Almost every company with an ethical sourcing policy
requires the payment of either a legal minimum wage or
an industry standard wage, which often amounts to the
same thing. However, the legal minimum wage in many
developing countries is not sufcient for a worker and
their dependents to meet their basic living needs. Legal
minimum wages may keep workers and their families in
poverty or force them into working excessive overtime to
make ends meet.
We believe that one of the most demonstrable diferences
a company can make to the welfare of their workers is
through the payment of a living wage. This is a wage high
enough to ensure that workers can meet basic needs (food,
water, shelter, clothing, energy, transport, education and
health care) for themselves and their families, with a small
amount left over for discretionary spending or savings in
case of an emergency.
Of the 39 companies analysed only Nokia was able to
provide sufcient evidence to demonstrate that workers
were receiving amounts above the legal minimum. It is
worth noting that both Microsoft and Samsung also claim
to pay above minimum wages, however at the time of
publishing we had not received sufcient documentary
evidence to verify this.
This wage deprivation is compounded by the fact that
only 31% of companies uphold the right of supply chain
workers to engage in collective bargaining. Worse still,
Nokia was the only company able to sufciently identify
factories where collective bargaining arrangements
existed. The International Labour Organization has found
that in countries with high rates of collective action in the
workplace (>30%), wage increases correlate more closely
with economic growth compared to countries with low
levels of collective action.
[1]
In other words, workers on
the aggregate earn more when they are unied and thus
structurally capable of engaging in collective bargaining.
It is important that collective bargaining is recognised as
a distinctly protected right. Our research indicates that,
with perhaps the single exception of Nokia, few brands are
taking sufcient action towards recognising workers rights
to freedom of association and collective bargaining.
Finally, we accept that it is extremely difcult to directly
measure the extent of child or forced labour in a supply
chain as it is so often hidden. However, we do know that
where workers are treated fairly (where they can speak out
about their conditions and receive adequate pay) modern
Payment
of a living
wage
Partial
Nokia receives partial
credit for demonstrating
that some suppliers at the
nal assembly stage pay
workers a living wage
slavery is far less likely to occur. Advocating for living wages within the
supply chain and promoting the rights of workers to engage in collective
action, while benecial in their own right, are also signicant measures to
reduce the risk of slavery.
Sources:
[1] International Labour Organization, Global Wage Report 2008-09 p.41, http://www.ilo.org/wcmsp5/
groups/public/---dgreports/---dcomm/documents/publication
wcms_100786.pdf
Introduction | Living Wage & Collective Bargaining
This chapter provides an overview of how we
graded companies.
1
Methodology
Methodology | How We Grade Companies
Our assessment system gives companies and supply chains A to F
grades on their eforts to guard against the use of child and forced
labour and worker exploitation in production. Assessments are based on
publicly available information and data self-reported by the company.
Companies that did not respond substantively to our enquiries and have
not provided data are marked with an asterisk (*). We contacted each
company multiple times before recording a non-substantive response. A
few companies responded but chose not to disclose any additional data.
These are also marked with an asterisk.
The supply chain of an average electronic product has many diferent
stages. At the raw materials level, electronics contain dozens of minerals
that have been extracted from the ground in every continent except
Antarctica. These minerals are traded several times before being smelted
and rened, a process that amalgamates minerals from a multiple of
diferent locations. Next, the rened minerals enter the global market
where they are typically traded again, and then purchased by component
manufacturers. These manufacturers number in the tens of thousands, and
predominantly operate in Asia; particularly in China, Japan, South Korea,
Taiwan, Thailand, the Philippines and Singapore. Then, the components are
incorporated into a myriad of diferent branded products which are nally
sold to consumers across the globe.
In this study we focused on companies interaction with three key stages:
raw materials (mineral extraction), inputs (smelting and rening and/or
component manufacturing), and nal manufacturing. This is a simplied
supply chain that generally reects the complicated supply chain
dynamics of the brands analysed. There can, for example, be considerable
overlap between the stages.
5
We looked at three key electronics supply chain production phases:
FINAL
MANUFACTURING
SMELTING &
REFINING
and/or
COMPONENTS
MANUFACTURING
EXTRACTION
We give companies A-F grades for eforts to address slavery.
We evaluated 39 major electronics brands.
To evaluate a company, we asked a set of 61 questions about its production policies and practices.
The questions addressed the companys management of mineral extraction, smelting and rening, and
nal manufacturing, and fall into four categories:
6
Methodology | How We Grade Companies
At each supply chain level, we assessed the companies
management systems in four categories:
Policies
We evaluated the brands
code of conduct, sourcing
and subcontracting policies,
and involvement with other
organisations working to
combat child and forced labour.
Traceability & Transparency
We looked at how thoroughly
the brand understands its own
supply chain, and whether it
discloses critical information to
the public.
Monitoring & Training
We measured the adequacy
of the brands monitoring
program to address the
specic issues of child and
forced labour.
Worker Rights
We assessed the degree to
which the brand supports worker
well-being by ensuring that
workers are able to claim their
rights at work through collective
bargaining or worker owned
cooperatives, and whether
workers earn a living wage.
When conducting a brand evaluation, our research team rst assessed
a brands own publications alongside relevant independent reports
and data such as third party audit ndings and non-governmental
organisation (NGO) publications. Next, we sent our questionnaire
for information and comment directly to the company. Where they
responded, we reviewed the evaluation again. We allot six to eight
weeks for this process.
Our grades take into account the prevalence of child and forced
labour in the countries where the selected companies operate. Where
companies source from suppliers in low risk areas, they are graded on
a softer curve because it is expected that less stringent management
systems are necessary to combat abuse in these regions, particularly
where a strong national rule of law exists.
It is important to note that due to the lack of access to on-the-ground
information, we have gathered data on CSR systems and not on
the actual working conditions they are designed to ameliorate. High
grades do not necessarily represent supply chains free of child and
forced labour or worker exploitation, but instead represent those
that are better managed on a relative basis. Our grades are only an
indication of the extent to which companies have developed a set
of management systems that theoretically prevent abuses. As the
Clean Clothes Campaign has stressed, the components of a CSR
system will likely only create positive impact if used in conjunction
with one another.
[1]
For example, a company can have strong written
policies against modern slavery and gather information about supplier
working conditions through in-depth monitoring, but unless it uses
these standards and information to correct grievances, we would not
expect it to create much impact on actual working conditions. The
category grades represent the health of sections of a system rather
than the system as a whole, and should be evaluated within this
broader context.
This chapter provides a geographical overview of
where child and forced labour are used in electronics
production today. We use this information to
understand companies specic supply chain risks.
2
The
Problem:
Child &
Forced
Labour
Electronics Industry
Methodology | How We Grade Companies
Our assessments rank companies for their relative eforts. It is our
hope that in the future, better standard practices will enable us to
grade companies on a more rigorous curve.
For more information on our risk assessments and broader
methodology, see www.free2work.org
Sources:
[1] Clean Clothes Campaign, Looking for a Quick Fix: How Weak Social Auditing is
Keeping Workers in Sweatshops, p.77, 1 November 2005 http://archive.cleanclothes.org/
documents/05-quick_x.pdf
Children and forced labourers can be found working at multiple stages of
todays electronics supply chains. In this section (pages 8-11), we explore
specic instances of modern slavery in the manufacturing and extractives
sectors. We give an overall picture of the documented cases of child and
forced labour through a series of maps, and provide country spotlights for
a specic look at selected issues.
Child and Forced Labour in Electronics and
Component Manufacturing
Child and slave labour is not limited to the extractive stage of the
electronics supply chain. The component and nal production stages
are also home to these abuses. Components manufacturing is the point
at which the parts for electronics products are created. This includes
items such as cables, hard disk drives and circuit boards. Components
consist of various materials, including minerals, plastics and a variety of
petroleum-based substances. The nal production stage is manufacturing
where electronic goods are assembled and nished prior to sale. In recent
years, these stages of the electronics supply chain have received media
attention due to the discovery of child and slave labour practices by
various manufacturing suppliers. The following pages highlight a few key
examples.
Child and Forced Labour in Minerals Extraction
The use of modern slavery is particularly prevalent in the extractives
sector. Minerals that are often present in electronics such as gold, bauxite,
halite, tin, tantalum, tungsten and lithium have been mined by either
large mining companies exclusively, or by a combination of large mining
companies and small independent producers known as Artisanal and
Small-scale Miners (ASM). The ASM sector employs between 13-20 million
people worldwide, predominantly in developing states, and is known to
be highly vulnerable to the presence of child and forced labour as well as
other forms of worker exploitation.
[1]
The poverty and informal work status common to ASM workers leave
many susceptible to enslavement. Impoverished, illegal miners are
unattractive formal loan candidates. These miners regularly borrow money
from local loan sharks or sponsors who oversee their mining operations
and take a percentage of their income. As a direct result of these
agreements, workers in the ASM sector can end up in indebted servitude,
or debt bondage, a form of modern slavery. Research shows the ASM
sector is also the most likely group of producers in the extractives
industry to contain child labour. Children working in ASM sufer long-term
physical and mental harm on account of their consequent exclusion from
school, the arduous nature of the jobs they perform, and the dangerous
substances they are regularly exposed to in the mining environment.
[2]

After minerals are extracted from the ground, they are traded and then
smelted and rened. In the smelting and rening process minerals are
isolated from their ores and puried. The smelting and rening process
is particularly signicant to the tracing or tracking of electronics supply
chains. Smelting and rening amalgamates minerals from many diferent
sources, and often combines minerals produced with child and slave
labour with those that do not possess such a history. The ability to
denitively trace the origins of minerals and determine the manner in
which they were produced is, as a result, greatly complicated. This stage
of the supply chain is also crucial for tracing the origin of minerals, and so
the electronics industrys eforts towards tracing the source of minerals
by tracing smelters is encouraging. In the Traceability and Transparency
section of this report (page 18) we look at initiatives that aim to increase
the transparency surrounding smelters and reners and preserve the
origins of certain minerals.
Sources:
[1] Abbi Buxton, Responding to the challenge of artisanal and small-scale mining. How can
knowledge networks help? p.1, 2013, IIED http://pubs.iied.org/pdfs/16532IIED.pdf?
[2] Mining, Minerals and Sustainable Development, Global Report on Artisanal & Small Scale Mining
p.24, 2002 http://pubs.iied.org/pdfs/G00723.pdf
Child & Forced Labour in Electronics Supply Chains | Overview
8
Child & Forced Labour | in Electronics & Component Manufacturing
Spotlight: China
Chinas electronics manufacturing sector
is home to both child and forced labour. A
number of NGOs and even the companies
themselves have documented cases of
abuse. For example, in 2012 China Labor
Watch, a human rights advocacy NGO,
released a report on the labour practices
of HEG Electronics Co. Ltd., an electronics
processing company and major Samsung
supplier. They found that HEG regularly
employed children under the age of 14 in
its factories.
While most electronics companies do not
report specic statistics on the existence
of modern slavery in manufacturing
facilities, Apple made a move toward
transparency in this area in 2012 following
press attention decrying its supply chain
conditions. The companys ndings
reveal something about the extent of the
problem in the industry as a whole: in 2014
Apple reported that of the 451 facilities it
audited, a total of eight supplier facilities
used bonded labour and 11 facilities used
child labour.
Sources:
China Labor Watch: Samsung Factory Exploiting Child Labor - Investigative
Report on HEG Electronics (Huizhou) Co., Ltd Samsung Supplier, 2012
http://chinalaborwatch.les.wordpress.com/2012/08/samsung8-271.pdf
Apple Supplier Responsibility 2014 Progress Report http://images.apple.com/
supplier-responsibility/pdf/Apple_SR_2014_Progress_Report.pdf
China is the global leader in electronics manufacturing. Under-age children and forced labourers continue to
be found working in export factories in China today, according to the US Department of State.
9
Where is Child and Forced Labour Used?
KEY:
Countries known to use child and/or forced
labour in electronics manufacturing
(Source: DOL List of Goods Produced by Child
Labor or Forced Labor, 2011)
CHINA
Child & Forced Labour | in Minerals Extraction
Many of the devices we buy contain minerals extracted by people held in modern slavery. Below is a map of the top
countries that extract seven main minerals (see key) found in electronics. The map on the next page shows where child
and forced labour is used to extract these minerals.
10
Where does mineral extraction take place?
Every country in Africa with an ASM sector is
home to child labour as the two practices go
virtually hand in hand. Gold mining regularly
exposes ASM workers, including child labourers,
to the elements arsenic and mercury. These
chemicals can cause serious harm and can be
fatal in high doses. In the gold mines of Mali up
to 40,000 children mined this metal during 2011.
It was regularly purchased by large trading rms
residing in Switzerland and Dubai.
Spotlight: Mali
MEXICO
ARGENTINA
BRAZIL
CUBA
CTE DIVOIRE
USA
CANADA
PERU
RWANDA
ETHIOPIA
INDIA
INDONESIA
VIETNAM
CHINA
MALAYSIA
AUSTRALIA
SOUTH AFRICA
MADAGASCAR
GHANA
MOROCCO
BOLIVIA
SPAIN
SWITZERLAND
ZAMBIA
DR CONGO
UKRAINE
IRAN
KAZAKHSTAN
RUSSIA
NEW CALEDONIA
KEY:
Coloured triangles
represent countries that
lead the world in the
extraction of specic
minerals
(Source: FAOSTAT, 2011; British
Geological Survey: World
Mineral Production, 2007-2011)
Gold
Tin
Cobalt
Iron
Tungsten
Copper
Tantalum
In 2008, a Bloomberg investigative report
examined the prevalence of child labour within
copper and cobalt mines in the Katanga
province of the DRC. Copper is commonly used
in the manufacture of electronic components,
while cobalt is a key element of electrical
devices. The reporter discovered that thousands
of children worked in the mines, often in
structurally dangerous conditions. Some children
have died as a result of the work they were
performing. The copper and cobalt mined
by child labourers was purchased by nearby
foreign-owned smelting plants, before being
sold on to the world market. These rened
minerals were eventually traced to the suppliers
of some of the worlds largest electronics
brands.
These examples illustrate the extreme hardships
endured by child labourers in the ASM sector.
They also show the ease with which minerals
mined by children can enter the market, and the
supply chains of some of the electronics brands
analysed in this report.
Spotlight: Democratic
Republic of the Congo
Sources:
Human Rights Watch, A Poisonous Mix: Child Labour, Mercury and
Artisanal Gold Mining in Mali, December 2011
http://www.hrw.org/reports/2011/12/06/poisonous-mix
Simon Clark, Michael Smith and Franz Wild, Child Workers Die Digging
in Congo Mines for Copper Bloomberg, 22 July 2008 http://www.
bloomberg.com/apps/news?pid=newsarchive&sid=aW8xVLQ4Xhr8
11
Where is child and forced labour used in mineral extraction?
KEY:
Red represents countries known to use child and/or
forced labour in the extraction of one or more minerals
(Source: DOL List of Goods Produced by Child Labor or
Forced Labor, 2011)
COLOMBIA
GUINEA
SURINAME
SENEGAL
NICARAGUA
ECUADOR
BOLIVIA
PERU
D R CONGO
TANZANIA
ETHIOPIA
INDONESIA
MALI
BURKINA FASO
GHANA
NIGER
MONGOLIA
NORTH KOREA
PHILIPPINES
Child & Forced Labour | in Minerals Extraction
3
Company
Performance:
Overview
Electronics Industry
F
D
C
B
A
Company Performance: Overview
Blackberry
Dell
Fujitsu
Hitachi Ltd
HTC*
IBM*
Amazon Kindle*
Asus*
Canon*
Garmin
Huawei*
Hisense*
Kogan*
Palsonic*
Soniq*
Intel*
Lenovo*
Oracle*
Philips
Toshiba
Nintendo
Panasonic
SanDisk*
Sharp*
TEAC*
Acer
Apple
Dick Smith Electronics*
Hewlett Packard
LG Electronics
Motorola Mobility
Microsoft
Nokia
Olympus
Samsung
Sony
TomTom
Motorola Solutions
Woolworths Australia
yes
partial
no
KEY:
Company Performance | Visual Overview
13
The remaining sections of this report look at companies eforts in specic evaluation categories. The infographic below
provides a visual overview of company performance - each column represents one company, and each small coloured bar
corresponds to one indicator. YES (positive) answers are in green, and NO (negative) answers are in red. The rest of this
report will go into detail on these indicators. Note that companies with higher grades are doing more to manage their
supply chains at multiple levels.
Company
Grade
B-
A
c
e
r
Final
Manufacturing
Smelting/
Components
Extraction
Performance on
Key Indicators
Policies
See Policies section of report
for details on indicators
Performance on
Key Indicators
Traceability,
Monitoring,
Worker Rights
See Traceability, Monitoring,
and Worker Rights sections of
report for details on indicators
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4
Company
Performance:
Policies
This chapter focuses on companies policies to
address child and forced labour in their supply chains.
While good policies do not necessarily mean good
practices, they are a critical starting point. They form
the backbone of management systems that uphold
worker rights and protect against abuses. We use a
set of indicators to assess each companys code of
conduct, sourcing and subcontracting policies, and
involvement with other organisations working to
combat modern slavery.
Electronics Industry
F
D
C
B
A
Company Performance: Policies
Blackberry
Dell
Fujitsu
Hitachi Ltd
HTC*
IBM*
Amazon Kindle*
Asus*
Canon*
Garmin
Huawei*
Hisense*
Kogan*
Palsonic*
Soniq
Intel*
Lenovo*
Oracle*
Philips
Toshiba
Nintendo
Panasonic
SanDisk*
Sharp*
TEAC*
Acer
Apple
Dick Smith Electronics*
Hewlett-Packard
LG Electronics
Motorola Mobility
Microsoft
Nokia
Olympus
Samsung
Sony
TomTom
Motorola Solutions
Woolworths Australia
Policies | Industry Overview
The following statistics provide a snapshot overview of the existence of policies in the electronics
industry to protect against exploitation, child labour and forced labour. They are based on the
scorecards of the 39 companies we assessed, which can be viewed in more detail on the next page.
Codes of Conduct
A Code of Conduct lays out minimum social requirements suppliers must follow. Good codes are
based on internationally agreed upon standards. The International Labour Organizations (ILO) Four
Fundamental Principles and Rights at Work dene clear principles for prohibitions against child
labour, forced labour and discrimination, and guarantees for worker rights to freedom of association
and collective bargaining. Among the companies we assessed, it was encouraging to see that a
majority - two thirds - have Codes of Conduct that align at minimum with these basic principles.
44% of the companies assessed had adopted the Electronics Industry Citizenship Coalition (EICC)
Code of Conduct, which prohibits the use of child and forced labour and addresses the common
roots of human trafcking. However, it fails to include the right to collective bargaining.
Responsible Purchasing
The way a company purchases from its subcontracted factories and suppliers afects those
businesses ability to provide decent and safe conditions for workers. When brands deliberately
foster intense competition, workers may sufer as suppliers seek to win contracts by depressing
labour costs, such as wages and overtime payments. Only 10% of the companies assessed -
Samsung, LG, Motorola and Microsoft - guarantee a decent price or alternatively take measures to
nancially enable their suppliers to ensure decent working conditions.
Subcontracting Policies
It is common practice for suppliers to subcontract out parts of companies orders to unauthorised,
unmonitored facilities where workers may be left without any redress in the event of abuse. These
workers are some of the most vulnerable within the electronics industry. 41% of companies assessed
say they are taking some steps to ensure the code of conduct standards are implemented in
subcontracting arrangements.
15
Of the 39 electronics
companies assessed:
15% Partial
have a code of conduct
that covers core
ILO principles and
Rights at Work
82%
3% Partial
10% Partial
have a policy
addressing
subcontracting
and homework
41%
20%
have taken steps
to use responsible
purchasing practices
Policies | Company Performance Scorecard
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Does the brand have a code that addresses labour standards?
Does the code prohibit discrimination on the basis of
personal attributes or afliations?
Does the code include elimination of child labour?
Does the code include abolition of forced or compulsory labour?
Are suppliers required to ensure freedom of movement for
employees and their right to leave and enter work voluntarily?
Are suppliers prohibited from using recruitment fees?
Does the code include freedom of association?
Does the code include rights to collective bargaining?
Does the code prohibit use of regular and excessive overtime?
Does the code apply to multiple levels of the supply chain?
Is the code included in supplier contracts?
Does the brand have a policy of non-interference toward
trade unions and worker organising?
Does the brand participate in any multi-stakeholder initiatives?
Does brand have a policy that addresses subcontracting in
the supply chain (including homework)?
Has the brand taken steps to use responsible purchasing
practices?
Q1
Q2
Q3
Q4
Q5
Q6
Q7
Q8
Q9
Q10
Q11
Q1
Q2
Q3
Q4
Policies
Code of Conduct
Here is a more detailed look at our policies questionnaire. See how companies performed on specic indicators.
16
Policies Grade:
Each coloured bar represents
one indicator. Not all indicators
in the Free2Work questionnaire
are depicted in this graphic.
KEY:
yes partial no
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= non responsive companies
Winners & Losers
Company Performance: Policies
Policies | Good Practice Highlights
17
Collective Bargaining: Nokia
Of all companies assessed, only Nokia provided evidence
of factories that have collective bargaining agreements in
place. History has demonstrated that collective bargaining
and freedom of association are essential methods for
workers to balance bargaining power in employment
relations and negotiate for improved pay and working
conditions. This is particularly important for workers in
developing countries who undertake low-skilled work in
regions where there is frequently a surplus of labour. These
conditions dramatically weaken their negotiating power and
make them vulnerable to exploitation and modern forms
of slavery. Workplaces where employees are empowered
through processes like collective bargaining will signicantly
mitigate these risks.
Beyond this, collective bargaining is also one of the
ILOs Four Fundamental Principles and Rights at Work.
It is concerning that only one third of companies had
policies that included the right to collective bargaining,
and only one company provided evidence that collective
bargaining was occurring. Without the presence of
worker representative organisations, rights to freedom of
association and collective bargaining risk becoming rights
in theory only. We encourage the electronics industry to
embrace policies that promote collective bargaining and
ensure that organisations allowing this to occur are in place.
Recruitment Fees: Apple
Apple requires suppliers to reimburse excessive recruitment
fees charged to contract workers found working on Apple
products.
[1]
In exchange for employment, labour brokers
often charge potential contract workers recruitment fees.
Where these recruitment fees are excessive, prospective
employees may nd themselves with large debts before
they start work. These debts, compounded by high interest
rates, can leave workers paying a high proportion of their
income in an attempt to pay these debts. Workers are often
not allowed to leave until the debts are paid of, and this
can result in situations of bonded labour. The EICC Code of
Conduct prohibits charging workers excessive recruitment
fees. Apple denes excessive recruitment fees as amounts in
excess of one months wages.
[2]
In 2014, they reported that
$US3.9 million was paid by their suppliers to workers who
were charged excessive recruitment fees and since 2008,
their suppliers have reimbursed contract workers $16.9
million.
[3]
Next, we encourage Apple to ensure that reimbursements
are made available to more workers within its supply chain
as there continue to be reports of workers who have not
had recruitment fees returned to them.
[4]
It could also take
further steps to entirely ban suppliers and labour brokers
from charging recruitment fees to workers.
The following are more detailed snapshots of two companies good practices in the Policies category.
Companies that
guarantee above local
minimum wage
Compare
to Wage
Impact:
F
ONE
D
C
B
A
Sources:
[1] Apple Supplier Responsibility Progress Report 2014 p.15.
[2] Apple Supplier Responsibility Standards, Version 4.0
[3] Apple Supplier Responsibility Progress Report 2014 p.15
[4] China Labor Watch, Apples Unkept Promises, July 2013. https://www.chinalaborwatch.org/pro/proshow-181.html
Blackberry
Dell
Fujitsu
Hitachi Ltd
HTC*
IBM*
Amazon Kindle*
Asus*
Canon*
Garmin
Huawei*
Hisense*
Kogan*
Palsonic*
Soniq
Intel*
Lenovo*
Oracle*
Philips
Toshiba
Nintendo
Panasonic
SanDisk*
Sharp*
TEAC*
Acer
Apple
Dick Smith Electronics*
Hewlett-Packard
LG Electronics
Motorola Mobility
Microsoft
Nokia
Olympus
Samsung
Sony
TomTom
Motorola Solutions
Woolworths Australia
5
This chapter focuses on electronics companies
supply chain traceability and transparency. It looks
at how 39 companies perform in this category and
highlights specic good practices.
Company
Performance:
Traceability &
Transparency
Blackberry
Garmin
Hitachi Ltd
IBM*
Olympus
Amazon Kindle*
Asus*
Canon*
Dick Smith Electronics*
Fujitsu
HTC*
Hisense*
Palsonic*
TEAC*
SanDisk*
Sony
TomTom
Woolworths Australia
Huawei*
Kogan*
Lenovo*
Nintendo
Oracle*
Soniq*
F
D
C
B
A
Acer
Motorola Solutions
Philips
Samsung
Sharp*
Toshiba
Traceability & Transparency Scores:
Apple
Dell
Hewlett-Packard
Intel*
LG Electronics
Microsoft
Motorola Mobility
Nokia
Panasonic
Electronics Industry
Traceability & Transparency | Industry Overview
Surprisingly, many companies do not know exactly who produces their goods. Since child labour, forced
labour and exploitation are used in electronics manufacturing, components manufacturing, smelting
and mineral extraction globally, it is critical that companies know the actors in each stage of their supply
chain to guard against such abuses. Public transparency is also important because it shows a companys
willingness to be held accountable to both workers and consumers. We dene traceability as the extent
to which a company understands its supply chain, and transparency as the extent to which it makes
information publicly available. The statistics below reveal how the 39 companies assessed perform in
three key traceability and transparency areas.
Known Suppliers
We believe it is the responsibility of companies to know the identity of their suppliers. Without this
knowledge, it is impossible for brands to ensure the labour rights of the people who make their products.
While there is still much work to be done, traceability is one of the electronics industrys areas of
strongest performance. Almost half (49%) of all companies assessed have traced all or almost all of their
suppliers responsible for the nal stage of manufacturing; 26% have done the same for their components
manufacturing; and, while none have completely traced their mineral extraction, 59% of companies are
involved in tracing projects to better understand their mineral suppliers in order to avoid sourcing conict
minerals from the DRC. With respect to minerals tracing, there is room for improvement. Most of these
traceability eforts are model projects that focus on a select few suppliers. Only 18% of companies directly
traced some suppliers in the extractive stage through these pilot projects, including Solutions for Hope
which is a closed-pipe tantalum supply chain project and the Conict Free Tin Initiative.
Public Supplier Lists
In the ght against child labor, forced labor and exploitation, it is vital that companies produce public
supplier lists. Such lists increase the transparency surrounding industries, and enable companies to be
held accountable to workers in their supply chains. Transparency also enables independent groups to
shed light on working conditions, which can in turn facilitate better public understanding of the issues
and consumer demand for change. Only 28% of brands we assessed provide public supplier lists, and
of those, only Apple and Hewlett-Packard provide a comprehensive public list of suppliers at the nal
manufacturing stage with both names and addresses. Dell also has a comprehensive public list of 95%
of its suppliers including links to their websites and sustainability programs where they exist.
19
of companies
assessed publish
at least some
supplier names
28%
Of the 39 electronics
companies assessed
Components
Manufactoring - 26%
Final Stage
Production - 49%
Percentage of companies that have fully traced their
suppliers for nal stage and components manufacturing,
and percentage of suppliers that have partially traced
their suppliers for minerals extraction:
Partial Tracing for
Minerals Extraction - 18%
Traceability & Transparency | Industry Overview
Tracing Projects
The majority of companies we assessed are working to
trace their supply chains, in most cases to prevent the
sourcing of conict minerals. Conict minerals are those
that emanate from places where an internationally-
recognised conict is occurring. The Democratic Republic
of the Congo, where an ongoing civil war has claimed
5 million lives
[1]
is the leading source of the worlds
conict minerals: tin, tungsten, tantalum and gold (known
collectively as 3TG). Many conict mines use child and
forced labourers, and also host other forms of modern
slavery such as sexual slavery and forced marriage. Children
work in particularly hazardous conditions as diggers,
porters, and mineral extractors. Many are forced to work in
narrow mine shafts where their small bodies t better than
adult ones.
The 2010 Dodd-Frank Reform Act (US) requires companies
that use any of these four minerals to learn more about
their supply chains and report to the Securities and
Exchange Commission. In order to comply with this new
law, companies must prove that they have taken reasonable
precautions to avoid these four minerals originating in the
DRC and surrounding countries. The majority of these are
engaged with the anti-conict mineral partnership of the
EICC and the Global e-Sustainability Initiative (GeSI).
The EICC and GeSI have established two tools that
companies can use to check the conict-free status of their
supply chains: the Conict Minerals Reporting Template and
the Conict-Free Smelter (CFS) Program. The Reporting
20
Template is a survey that companies can ask their suppliers
to complete. Suppliers ll in information related to the
minerals they use, the products they create, and the
smelters from which they source. If accurately completed,
the surveys can provide valuable information about the
rms from which they directly and indirectly source. The
CFS Program, on the other hand, audits smelters and
reners who elect to participate; rms are evaluated on
the steps they take to avoid purchasing and/or processing
conict minerals. Those that participate are publicly
classied as conict-free.
Sources:
[1] International Rescue Committee, Mortality in the Democratic Republic of the
Congo: An Ongoing Crisis 2006-2007. http://www.rescue.org/sites/default
les/resource-le/2006-7_congoMortalitySurvey.pdf
Of the 39 electronics
companies assessed
are involved in a
project to trace
minerals suppliers
59%
Traceability & Transparency | Company Performance Scorecard
Has the brand traced all or almost all of its suppliers at one
raw materials level? (partial = some directly traced)
Q4
Here is a more detailed look at our Traceability & Transparency questionnaire.
See how companies performed on specic indicators.
21
Traceability & Transparency Grade:
Final
Manufacturing
Smelting/
Components
Extraction
Is there a public list of countries in which suppliers are located?
Q1
Q2
Q3
Is there a public list of suppliers?
If not fully traced, is brand involved in a tracing project to
locate unknown suppliers?
Is there a public list of countries in which suppliers are located?
Q1
Q2
Q3
Q4
Has the brand traced all or almost all of its smelters or
components manufacturers? (partial = some directly traced)
Is there a public list of suppliers?
If not fully traced, is the brand involved in a tracing project to
locate unknown suppliers?
Does the brand have a system to make sure subcontractors
are known?
Does the brand track suppliers use of temporary or
contract workers?
Is there a public list of countries in which suppliers are located? Q1
Q2
Q3
Q4
Is there a public list of suppliers?
D
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Each coloured bar represents one indicator.
Not all indicators in the Free2Work
questionairre are depicted in this graphic.
KEY:
yes partial no
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= non responsive companies
Traceability & Transparency | Good Practice Highlights
22
Mineral Tracking Initiative: Motorola
Solutions
In 2011, Motorola Solutions, in partnership with AVX
Corporation, established Solutions for Hope, an initiative
that sources conict-free tantalum from the DRC. In
establishing this project, Motorola has recognised that not
all minerals sourced from the DRC or adjoining countries
are actually fuelling the conict. In many parts of the
DRC, minerals are mined by members of the ASM sector
who are not associated with the ghting, and depend on
these natural resources for their livelihoods. In 2012, it was
estimated that 20% of the population of the DRC was either
working in the ASM sector, or living of ASM generated
income.
[1]
A blanket boycott of all DRC minerals therefore
has the capacity to seriously harm the livelihoods of a large
number of people. Solutions for Hope has established a
closed-pipe supply line, in which carefully selected conict-
free tantalum miners in the DRC supply the mineral to
participating rms. This enables these miners to operate
free of the general constraint imposed by the U.S. Securities
Exchange Commissions anti-conict mineral regulations,
while also providing them with a regular, reliable income. So
far, Solutions for Hope has resulted in 145 metric tonnes of
conict-free tantalum from the DRC entering the market
[2]
.
This mineral tracking scheme provides cooperating
companies with an unparalleled ability to trace the origins of
at least a portion of the tantalum they use.
In addition to Motorola Solutions, other companies in this
report involved in this initiative include: Motorola Mobility,
Nokia, Intel, Hewlett-Packard and Blackberry.
Transparency: Philips, Hewlett-Packard,
SanDisk and Apple
Philips, Hewlett-Packard and SanDisk have been industry
leaders in the area of transparency by making public their
full list of smelters, which are crucial in tracing the origin
of minerals. In 2014 Apple joined the initiative. These
companies are now better able to manage the risks of child
and forced labour in the portion of their supply chain they
have traced. These companies publish the identity of their
suppliers, which is critical as it enables independent groups
investigating working conditions to highlight any concerns
found in the supply chain. This level of transparency was
unheard of in the electronics industry only three years
ago. Beyond business interests, companies may fear
that furnishing public supplier lists could expose them to
criticism if a supplier is discovered violating labour rights.
However, disclosure of suppliers this deep into the supply
chain reects the commitment of these companies to being
genuinely open and transparent.
Sources:
[1] G. Franken Certied Trading Chains in Mineral Production: A Way to Improve
Responsibility in Mining in Non-Renewable Resource Issues: 213
Geoscientic and Societal Challenges, p.215 http://web.mit.edu/12.000/www/
m2016/pdf/certiedtradingminerals.pdf
[2] Solutions For Hope Website/ Results http://solutions-network.org/site-
solutionsforhope/results/
Companies that
guarantee above local
minimum wage
Compare
to Wage
Impact:
Winners & Losers
F
Only
NOKIA
D
C
B
A
The following are more detailed snapshots of two companies good practices in traceability and transparency. Traceability is the
extent to which a company knows its supply chain. Transparency is the extent to which it makes information publicly available.
Traceability & Transparency Scores:
Blackberry*
Garmin
Hitachi Ltd
IBM*
Olympus
Amazon Kindle*
Asus*
Canon*
Dick Smith Electronics*
Fujitsu
HTC*
Hisense*
Palsonic*
TEAC*
SanDisk*
Sony
TomTom
Woolworths Australia
Huawei*
Kogan*
Lenovo*
Nintendo
Oracle*
Soniq
Acer
Motorola Solutions
Philips
Samsung
Sharp*
Toshiba
Apple
Dell
Hewlett-Packard
Intel*
LG Electronics
Microsoft
Motorola Mobility
Nokia
Panasonic
Company
Performance:
Monitoring
6
This chapter focuses on electronics companies
monitoring and training programs, which can be
important parts of preventative systems. It looks
at how 39 companies perform in this category and
highlights specic good practices.
Acer
Apple
LG Electronics
Microsoft
Blackberry*
Garmin
Hitachi Ltd
IBM*
SanDisk*
Amazon Kindle*
Asus*
Canon*
Dick Smith Electronics*
Fujitsu
HTC*
Hisense*
Kogan*
Palsonic*
Soniq*
TEAC*
Sharp*
Sony
TomTom
Woolworths Australia
Huawei*
Lenovo*
Nintendo
Olympus*
Oracle*
F
D
C
B
A
Monitoring Scores:
Dell
Hewlett-Packard
Intel*
Motorola Solutions
Nokia
Panasonic
Philips
Motorola Mobility
Samsung
Toshiba
Electronics Industry
Monitoring & Training | Industry Overview
% of all companies assessed
that use auditing
# of companies that use internal monitoring,
broken down by % of suppliers monitored by
supply chain level
4
2
12
17
0%
1-25%
26-50%
51-75%
76-100%
Internal Systems
Twenty four (62%) of the brands we assessed use their own internally
developed monitoring systems to investigate suppliers to some
extent. These internal systems vary in quality and are not necessarily
better or worse than third party audits.
Third Party Systems
Twenty-two companies use a third party auditor to monitor at least a portion
of their supply chains. Many of these brands also use internal systems. Third
party monitoring systems, like internal ones, difer signicantly in quality.
Quality of Audit
Unannounced audits can provide a more accurate picture of day-to-day
operations because abuses cannot be as easily hidden without advanced
warning. Workers are best able to express concerns when interviewed of-
site, away from management. Only 24% of the assessed brands report using
unannounced visits and/or of-site interviews to conduct at least a portion of
their audits, with Samsung being signicantly more rigorous in its use of these
measures than others (see good practice highlight below). Given that more
than three quarters of the electronics companies we assessed arent engaging
in these practices, improving the quality of auditing practices is an area in need
of signicant attention by the industry.
% of companies that use
third party monitoring (FM)
# of companies that use third party
monitoring, broken down by % of
suppliers monitored with this system
17
12
0%
1-25%
26-50%
51-75%
76-100%
5
% of companies that audit
suppliers unannounced or with
of-site worker interviews (FM)
% of companies that monitor more
than 75% of suppliers annually, by
supply chain level
Audits are tools companies can use to gain snapshots of suppliers working conditions and to identify major abuses including the use of modern-day slavery. Workers themselves are among
the best monitors, since they are present when auditors cannot be. Accurate information can often only be gathered by interviewing workers of-site and away from management, where
workers feel comfortable to express concerns. The most replicable model (one that is under-utilised) is one where workers are organised into a functioning union with access to a safe
and efective grievance process. While audits can be a key element for ensuring compliance, they are by nature only efective when the information gathered is used to improve working
conditions. Audits can form the basis for corrective action plans which suppliers can use to correct issues. Many suppliers lack the capacity or knowledge to provide certain protections to
workers, which is why training programs can be an important tool.
% of companies that monitor
more than 75% of suppliers
annually, by supply chain level
Auditing Suppliers
24
4
62%
56%
24%
77
20
0%
1-25%
26-50%
51-75%
76-99%
100%
3
0
1
0
0
Final
Manufacturing
(FM)- 15%
Smelting/
Components - 3%
Of the 39 electronics
companies assessed
Minerals - 0%
4
Monitoring & Training | Company Performance Scorecard
Here is a more detailed look at our Monitoring and Training questionnaire.
See how companies performed on specic indicators.
Does the brand monitor at least 75% of its suppliers with
unannounced visits or of-site worker interviews? (Partial = some)
Q2
Q3
Does the brand share audit reports and corrective action
plans publicly? (Partial = some)
Q1
Does the brand monitor at least 75% of its suppliers
annually? (Partial = some monitored)
25
Monitoring & Training Grade:
Q2
Q3
Q1
Q2
Q3
Q1
Does the brand monitor at least 75% of its suppliers with
unannounced visits or of-site worker interviews? (Partial = some)
Does the brand share audit reports and corrective action
plans publicly? (Partial = some)
Does the brand monitor at least 75% of its suppliers
annually? (Partial = some monitored)
Does the brand monitor at least 75% of its suppliers with
unannounced visits or of-site worker interviews? (Partial = some)
Does the brand share audit reports and corrective action
plans publicly? (Partial = some)
Does the brand monitor at least 75% of its suppliers
annually? (Partial = some monitored)
Final
Manufacturing
Smelting/
Components
Extraction
D
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Each coloured bar represents one indicator.
Not all indicators in the Free2Work
questionairre are depicted in this graphic.
KEY:
yes partial no
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Q4
Are both auditors and factory managers trained to identify
human trafcking, child labour and forced labour?
Q5
Does the brand invest in supplier compliance implementation
through training and other nancial support?
Q4
Does the brand invest in supplier compliance implementation
through training and other nancial support?
Q4
Does the brand invest in supplier compliance implementation
through training and other nancial support?
*
= non responsive companies
Monitoring & Training | Good Practice Highlights
Training: Hewlett-Packard
Hewlett-Packard is the rst electronics company to
introduce specic supplier guidelines for the use of student
and dispatch workers. These workers are highly vulnerable
to exploitation. There are a number of reports arising
out of electronics factories of their use of child labour.
Workers with temporary employment arrangements are
similarly more vulnerable to exploitation, and are less
likely to raise complaints about working conditions since
their employment is easier to terminate. The training that
Hewlett-Packard provides, aids suppliers at both the nal
manufacturing and components manufacturing stages in
understanding the issues faced by dispatch and migrant
workers. In its 2011 Global Citizenship Report, Hewlett-
Packard attributed improvements in suppliers audit
performances to the training programs it had undertaken.
These eforts are to be applauded and highlight the ways in
which a company may engage with suppliers to deal with
working conditions beyond the standard cycle of social
audits and corrective action plans. Providing suppliers with
training is one way to encourage deeper understanding
of workers rights and to equip factories to identify the
challenges faced by known vulnerable groups.

Companies that
guarantee above
local minimum wage
Compare
to Wage
Impact:
26
Monitoring: Samsung
Samsung conducts on-site internal audits for 100% of its
factories responsible for the nal assembly of its products
each year, with up to a quarter of those factories also being
audited by a third party through the EICC. Furthermore,
Samsung claims to audit between half and three quarters
of their suppliers with either unannounced audits or with
of-site worker interviews. From research into the impact
of auditing in other industries, we know that the quality of
social audits is crucial to their efectiveness at detecting
incidences of modern slavery and worker exploitation.
[1]

Unannounced audits and of site worker interviews are one
of the most efective measures to get a genuine picture
of what is happening at the factory level. Only 24% of
companies were using these measures in their auditing, and
with the exception of Samsung, they were only using them
to audit a quarter of their supply chain or less. Samsung
could further improve on the good work it is already doing
by extending the use of these measures to its components
suppliers and by making audit reports and corrective action
plans public.
Source:
[1] Clean Clothes Campaign, How Weak Social Auditing is Keeping Workers in
Sweatshops http://www.cleanclothes.org/resources/publications/05-quick-x
pdf/view
The following are more detailed snapshots of two companies good practices in monitoring and training.
Winners & Losers
F
ONE
D
C
B
A
Monitoring Scores:
Acer
Apple
LG Electronics
Microsoft
Blackberry*
Garmin
Hitachi Ltd
IBM*
SanDisk*
Amazon Kindle*
Asus*
Canon*
Dick Smith Electronics*
Fujitsu
HTC*
Hisense*
Kogan*
Palsonic*
Soniq*
TEAC*
Sharp*
Sony
TomTom
Woolworths Australia
Huawei*
Lenovo*
Nintendo
Olympus*
Oracle*
Dell
Hewlett-Packard
Intel*
Motorola Solutions
Nokia
Panasonic
Philips
Motorola Mobility
Samsung
Toshiba
Company
Performance:
Worker Rights
7
This chapter focuses on the degree to which
companies support worker rights. It looks at
how 39 companies perform in this category and
highlights specic good practices.
Acer
Dell
Fujitsu
Hewlett-Packard
Hitachi Ltd
Intel*
Microsoft
Motorola Mobility
Motorola Solutions
Olympus
Oracle*
Philips
SanDisk*
Sony
TomTom
Toshiba
Woolworths Australia
F
D
C
B
A
------------------
Amazon Kindle*
Asus*
Blackberry*
Canon*
Dick Smith Electronics*
Hisense*
HTC*
Huawei*
IBM*
Kogan*
Lenovo*
Nintendo
Palsonic*
Sharp*
Soniq*
TEAC*
Worker Rights Scores:
Garmin
Nokia
Apple
LG Electronics
Panasonic
Samsung
Electronics Industry
Worker Rights | Industry Overview
28
Of the 39 electronics
companies assessed
Preferred Supplier Programs
Companies may possess policies and codes of conduct, but they will have little genuine
impact if there is no incentive for suppliers to adhere to them. Companies have the nancial
leverage to demand and ensure decent working conditions including living wages, particularly
by concentrating their order volumes with a sufciently narrow set of suppliers in order to
command a signicant portion of a suppliers product capacity. All of the brands in this report
have codes of conduct that espouse the protection of worker rights. However we found that only
38% of sourcing decisions at the nal manufacturing stage were based on supplier maintenance
of such standards. Such systems should provide incentives to suppliers to continue improving
labour standards.
Grievance Mechanisms
Grievance mechanisms are systems through which workers can anonymously submit complaints
of violations of their rights and seek relief. While some companies ask their suppliers to establish
internal grievance mechanisms, it is important that workers are given an avenue through which
they can communicate to an external party, since the supplier may be directly responsible for
the abuse. Among the companies assessed, 31% reported having a formal grievance mechanism
available to some portion of their supply chain.
base sourcing
decisions on supplier
labour conditions
(FM level)
33%
5% Partial
31%
have at least a pilot
grievance mechanism
project (FM level)
13% Partial
Risks of modern-day slavery are far less in workplaces where individuals are able to claim their rights at work through organising, and
where workers do not sufer from poverty wages. Most workers in electronics supply chains toil under poor conditions and are paid
extremely low wages. We look at whether companies are actively addressing worker well-being. The statistics below reveal how the
39 electronics companies we assessed perform in two key Worker Rights areas.
If child labour is discovered, does the brand nd a way to provide
for the childs education and replace the lost income to the family?
When child or forced labour is removed from the workplace,
is it later veried by unannounced monitoring?
Worker Rights | Company Performance Scorecard
Does the brand guarantee that workers make a living wage?
Does the brand have a system for basing sourcing decisions
on supplier labour conditions?
Does the brand have a functioning grievance mechanism
(may be a pilot project)?
Are collective bargaining agreements in place?
Q1
Q2
Q3
Q4
Q5
Does the brand have any systems or policies in place to
rehabilitate child or forced labourers if discovered?
Here is a more detailed look at our Worker Rights questionnaire. See how companies performed on specic indicators.
29
Worker Rights & Remidiation Grade:
Does the brand guarantee that workers make a living wage?
Does the brand have a system for basing sourcing decisions
on supplier labour conditions?
Are collective bargaining agreements in place?
Has the company identied independent, democratically
elected unions in at least 50% of suppliers? (partial=some)
Q1
Q2
Q3
Q4
Q5
Does the brand have a functioning grievance mechanism
(may be a pilot project)?
Does the brand guarantee that workers make a living wage?
Does the brand have a system for basing sourcing decisions
on supplier labour conditions?
Does the brand have a functioning grievance mechanism
(may be a pilot project)?
Has the company identied independent, democratically
elected unions in at least 50% of suppliers? (partial=some)
Q2
Q3
Q4
Q5
Q6
Does the brand have any systems or policies in place to
rehabilitate child or forced labourers if discovered?
Final
Manufacturing
Smelting/
Components
Extraction
A
c
e
r
*
A
m
a
z
o
n

K
i
n
d
l
e
Each coloured bar
represents one
indicator. Not
all indicators in
the Free2Work
questionairre are
depicted in this
graphic.
KEY:
yes partial no
D F
A
p
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C
*
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Are collective bargaining agreements in place?
Q1
Q7
Q8
Does the brand have any systems or policies in place to
rehabilitate child or forced labourers if discovered?
Q6
*
= non responsive companies
Worker Rights | Good Practice Highlights
Living Wage: Nokia
Nokia was the only brand we examined which demonstrated
that any of their workers are paid a living wage. As
discussed previously on page 5, wages are a crucial concern
for workers, and one of the most signicant indicators of
worker well-being. Nokia provided us with a third party audit
report demonstrating the steps they undertook to conduct
a basic needs analysis on the living costs of employees.
They also provided a comparison that looked at the wages
workers receive, the legal minimum wage, and living wage
calculations of local NGOs and trade unions. Nokia has
undertaken this analysis for a number of their factories, but
not all; and, accordingly, have been awarded partial credit.
This is one of the most signicant initiatives we have seen
amongst electronics companies, and one that would be well
worth replicating across the sector.
Grievance Mechanism: Microsoft
In 2011, Microsoft, the worlds largest software corporation,
initiated a new grievance mechanism - a hotline that
workers can access 24 hours a day, seven days a week
to voice concerns. It is the only system of its kind in the
electronics industry. The hotline came out of Microsofts
collaboration with the Fair Labor Association and the Clear
Voice Hotline, organisations that seek to improve conditions
for workers by increasing, respectively, supply chain
transparency and channels of communication available to
workers. It is unclear to what extent Microsoft has informed
its supply chain workers about the hotline or how the
company will follow up in the event of a grievance. These
actions will be critical to the hotlines efectiveness.
30
Fair Pricing (Non-Implemented): FairPhone
FairPhone is a social business that is in the early phases of
building what the organisation calls a fair(er) smartphone.
At the time of publishing FairPhone had only just released
their rst batch of phones, and as this initiative is still in its
infancy we have not yet evaluated their operations. We do,
however, look forward to seeing its progress. FairPhone
will face an uphill battle in creating a decent supply chain
because of its size. An employee notes, We know we
cant change the system overnight as a small player with
little leverage, but we think we have to make it tangible by
raising awareness and making step-by-step interventions.
We applaud FairPhones examination of supply chain issues
like fair pricing for Cobalt - something the industry as a
whole, which collectively has far greater leverage, should
tackle. We will watch with interest as this small company
attempts to progressively take these steps - steps that
will only be possible if consumers provide the demand for
the company to grow and gain greater leverage over its
developing supply chains.
Fairphone: About http://www.fairphone.com/about/
Companies that
guarantee above local
minimum wage
Compare
to Wage
Impact:
Winners & Losers
F
ONE
D
C
B
A
Worker Rights Scores: The following are more detailed snapshots of three companies good practices in the worker rights category.
Acer
Dell
Fujitsu
Hewlett-Packard
Hitachi Ltd
Intel*
Microsoft
Motorola Mobility
Motorola Solutions
Olympus
Oracle*
Philips
SanDisk*
Sony
TomTom
Toshiba
Woolworths Australia
------------------
Amazon Kindle*
Asus*
Blackberry*
Canon*
Dick Smith Electronics*
Hisense*
HTC*
Huawei*
IBM*
Kogan*
Lenovo*
Nintendo
Palsonic*
Sharp*
Soniq*
TEAC*
Garmin
Nokia
Apple
LG Electronics
Panasonic
Samsung
Index | Brand List
31
Company Name Brand Grade Living Wage Company Name Brand Grade Living Wage
Acer Acer B- NO
Apple Apple B+ NO
Asus* Asus* D- NO
Research in Motion* Blackberry* C- NO
Research in Motion* Research in Motion* C- NO
Canon Canon* D- NO
Dell Dell B- NO
Dell Alienware B- NO
Dick Smith Electronics Dick Smith Electronics* D NO
Fujitsu Fujitsu D+ NO
Garmin Garmin C NO
Hewlett-Packard Hewlett-Packard B NO
Hisense Hisense* F NO
Hitachi Hitachi C NO
HTC HTC* D NO
Huawei Huawei * D- NO
IBM IBM* C- NO
Intel Intel* B NO
Amazon Amazon Kindle* D NO
Kogan Kogan* D- NO
Lenovo Lenovo* D- NO
LG Electronics LG Electronics B+ NO
Microsoft Microsoft B+ NO
Motorola Mobility Motorola Mobility B NO
Motorola Solutions Motorola Solutions B- NO
Nintendo Nintendo D NO
Nokia Nokia B+ PARTIAL
Olympus Olympus B- NO
Oracle Oracle* D NO
Palsonic Palsonic* F NO
Panasonic Panasonic B NO
Panasonic Sanyo B NO
Philips Philips C+ NO
Samsung Samsung B NO
SanDisk SanDisk* C- NO
Sharp Sharp* C NO
Soniq Soniq* D- NO
Sony Sony C NO
TEAC TEAC* D- NO
TomTom TomTom C NO
Toshiba Toshiba B- NO
Woolworths Australia AWA C+ NO
Woolworths Australia Essentials C+ NO
Woolworths Australia Abode C+ NO
Woolworths Australia Woolworths C+ NO
Index | Brands By Grade
32
Company Name Brand Grade Living Wage Company Name Brand Grade Living Wage
Nokia Nokia B+ PARTIAL
Apple Apple B+ NO
LG Electronics LG Electronics B+ NO
Microsoft Microsoft B+ NO
Intel Intel* B NO
Hewlett-Packard Hewlett-Packard B NO
Motorola Mobility Motorola Mobility B NO
Panasonic Panasonic B NO
Panasonic Sanyo B NO
Samsung Samsung B NO
Acer Acer B- NO
Dell Dell B- NO
Dell Alienware B- NO
Motorola Solutions Motorola Solutions B- NO
Olympus Olympus B- NO
Toshiba Toshiba B- NO
Philips Philips C+ NO
Woolworths Australia AWA C+ NO
Woolworths Australia Essentials C+ NO
Woolworths Australia Abode C+ NO
Woolworths Australia Woolworths C+ NO
Garmin Garmin C NO
Hitachi Hitachi C NO
Sharp Sharp* C NO
Sony Sony C NO
TomTom TomTom C NO
IBM IBM* C- NO
Research in Motion* Blackberry* C- NO
Research in Motion* Research in Motion* C- NO
SanDisk SanDisk* C- NO
Fujitsu Fujitsu D+ NO
Amazon Amazon Kindle* D NO
Dick Smith Electronics Dick Smith Electronics* D NO
HTC HTC* D NO
Nintendo Nintendo D NO
Oracle Oracle* D NO
Asus* Asus* D- NO
Canon Canon* D- NO
Huawei Huawei * D- NO
Kogan Kogan* D- NO
Lenovo Lenovo* D- NO
Soniq Soniq* D- NO
TEAC TEAC* D- NO
Hisense Hisense* F NO
Palsonic Palsonic* F NO
Thank You | Our Team Of Volunteers
33
Abigail Blenkin
Alison McGill
Andrew Miller
Andrew Roberts
Eliza Whalley
Emily Saunders
Hugh Morgan
Jasmin Howorth
Jay Boolkin
Jill Wardrop
Julie Seymour
Lenny Elario
Liesje Barratt
Marianne Ibrahim
Mark Kelen
Melinda Woodhouse
Michael Williams
Minusha Balacharige
Naomi Fraser
Nicky Mathieson
Paul Atkinson
Sarah Hando
Sarah Martin
Tanya Fenwick
Teresa Leone
Una McGeehan
Yolande Kyngdon
We would like to thank our team of volunteers who contributed many hours of research for this report
over the past two years:
Thank you!