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A NNUA L REP ORT

2016


TABLE OF CONTENTS EXECUTIVE SUMMARY

3

PROTECTING VULNERABLE WORKERS

5

RESPONSIBLE RAW MATERIALS INITIATIVE

8

CHEMICAL MANAGEMENT

9

ENVIRONMENTAL SUSTAINABILITY 10 PUBLIC PROCUREMENT 11 12

STAKEHOLDER ENGAGEMENT

13

TRAINING AND CAPABILITY-BUILDING

14

2016

PUBLIC POLICY

EICC LEADERSHIP CIRCLE 17 RESPONSIBLE ELECTRONICS 2016 18

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/ EICC ANNUAL REPORT 2016

EICC MEETINGS AND EVENTS AROUND THE WORLD

20

CONFLICT-FREE SOURCING INITIATIVE

22

VALIDATED AUDIT PROCESS (VAP)

26

VAP AUDITS: BY THE NUMBERS

28

INDIRECT SPEND

31

ASSESSING PRIORITIES AND SENSING EMERGING RISKS

32

FY 2016 FINANCIAL HIGHLIGHTS

34

SENIOR LEADERSHIP, BOARD AND STAFF

35

EICC MEMBERS

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EXECUTIVE SUMMARY In 2016 the EICC tackled emerging issues, launched new initiatives, improved its capabilities and tools, expanded stakeholder engagement and collaborated with numerous industries. By doing so we are able to have a more positive impact on the supply chain than ever before, supporting the mission of the EICC and moving closer to fulfilling its vision of a global electronics industry that creates sustainable value for workers, the environment and business.

Our online Learning Academy, which helps members and their suppliers build capabilities to address a wide range of corporate social responsibility issues, had 34,000 course completions by the end of 2016, a 127 percent increase compared with the year before. In addition, we developed new in-person Code of Conduct trainings and VAP preparation workshops, conducting multiple courses in China and Malaysia in 2016.

Of course, few of the complex issues found in today’s global supply chains can be solved by industry alone. Effective and lasting solutions require the combined efforts of industry, governments, civil society and other stakeholders. To that end, in 2016 the EICC actively engaged organizations around the world, holding discussions with the U.S., Malaysian and Chinese governments, European Commission, United Nations, OECD, and ILO, as well as numerous nongovernmental organizations and industry associations. Through these engagements the EICC has been able to share its experiences and best practices and promote greater harmonization among various standards and tools.

The EICC and its Conflict-Free Sourcing Initiative (CFSI) launched the Responsible Raw Materials Initiative (RRMI) in November 2016 as a multi-industry effort to address the salient social and environmental impacts of extraction and processing of raw materials in supply chains, leveraging direct and indirect partnerships and using international standards as guideposts. Regarding conflict minerals specifically, the CFSI further expanded its impact in 2016 through partner engagement, efforts supporting upstream due diligence, and program improvements such as a new grievance and complaints mechanism and greater alignment with OECD due diligence guidance.

When it comes to combating issues in the supply chain, the experience of our membership is both wide and deep. In 2016 alone EICC members and their suppliers completed 538 VAP audits conducted by independent third-party audit firms, in 33 countries, along with more than 4,400 selfassessments to identify risks and correct issues in the supply chain. The EICC also enhanced its flagship Validated Audit Process by establishing a recognition program for factories, updating the VAP operations manual, improving the audit tracker, and creating a report card to continually assess the performance of its fourth-party Audit Program Manager.

An important component of operating responsible supply chains around the globe is environmental management, which is why the EICC Environmental Sustainability Work Group has focused on improving the ability of members’ facilities and supply chains to measure, track and improve performance. Key issue areas in 2016 included carbon and energy, water, and waste. Meanwhile, the EICC Chemical Management Work Group has focused on identifying issues and developing solutions through our participation in the Clean Electronic Production Network, capacity-building in worker protection and effective chemical management, and stakeholder engagement.

To further combat forced labor, a top priority for the EICC and its members, we created specialized audit protocols and self-assessments on forced labor, expanded the Workplace of Choice program to include 20 factories, and held in-country trainings on the EICC Forced Labor Protocol with labor agents in Malaysia and Nepal.

In 2016 the EICC also found itself at the intersection of public buyers and technology companies in countries where public procurement is increasingly tied to social performance. As a result, the EICC is conducting a series of meetings with its board of directors, public buyers, ICT companies and NGOs in the hope of creating consensus on a 2020 roadmap. EICC ANNUAL REPORT 2016 /

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As part of its ongoing efforts to protect student workers in China over the past few years, the EICC announced the credentialing of 22 vocational schools in the Henan province in 2016. The latest phase of this student worker pilot program showed promising results, with fewer than 6 percent of the students dropping out and more than 90 percent being paid directly by the factory. The EICC hopes to encourage the national government there to expand the program in 2017. Last but not least the EICC grew its membership in 2016, despite significant consolidation in the industry, demonstrating that companies continue to realize the value of EICC programs, tools and trainings. The EICC added 12 new members for 2016, ending the year with 114 members, up from 109 at the end of 2015. New members included companies in the automotive, toy and retail sectors; a reflection of the fact that electronics are increasingly important components of products across many industries and prompted in part by the EICC’s 2016 update of its membership eligibility definition to include “companies that manufacture or contract the manufacture of electronic goods or a product in which electronics are essential to the primary functionality of the product, or supply materials used in the electronics of those goods.” The expansion of the EICC is important because, each time a new member joins, the EICC gains greater visibility and reach into additional areas of the global electronics supply chain. Together, we are able to have a greater impact than any one organization or company could alone.

These are just some of the highlights of 2016 detailed in this annual report. To learn more about these and other initiatives, visit eiccoalition.org and contact us at info@eiccoalition.org.

“This was a milestone year for the EICC, with tremendous improvements in our capabilities, programs, tools and resources. The EICC is increasingly recognized by numerous industries, governments and other stakeholders for its innovative and effective approaches to tackling corporate social responsibility issues in the global supply chain.” – Rob Lederer

Executive Director, EICC

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/ EICC ANNUAL REPORT 2016


PROTECTING VULNERABLE WORKERS The EICC and its members understand that some workers in international supply chains are at higher risk for exploitation and that we have a responsibility to protect them. The EICC works with its members to address worker vulnerabilities by applying policies, programs and tools at every stage of the journey of a worker. Our current areas of highest concern and focus include forced labor in foreign migrant worker populations as well as labor violations related to student internships in specific geographic areas.

EICC End-to-End Framework for Responsible Labor Practices

Worker Journey Labor Agent Home

HR Staff

Factory

New Job

School

Home

Ethical Recruitment

Employment Experience

Labor agent training

Labor agent training

*Worker representative program

Labor agent self-assessment

Labor agent self-assessment

*Worker training

Labor agency audit

Labor agency audit

*Helpline

Labor agent certification

Labor agent certification

*Factory capacity building

Work pre-departure orientation

School assessment and accreditation

Risk assessment/data collection

Work pre-departure orientation

* Workplace of Choice Program

Future EICC Credential/Certification available

EICC ANNUAL REPORT 2016 /

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COMBATING FORCED LABOR EICC members recognize that conditions contributing to forced labor in international supply chains are unacceptable and must be met head-on with robust efforts. The EICC followed up its groundbreaking code changes in 2015, which eliminated worker fees, restricted the holding of passports, and added other worker protection provisions, by employing a variety of programs and tools to assist its members in their efforts to combat forced labor in 2016. These efforts were planned and implemented with respected partners that have specific expertise and many years of experience. In order to create better tools to discover and correct the conditions that contribute to forced labor, the EICC worked to create specialized self-assessments and audit protocols on forced labor. Using certified auditors trained in forced labor protocols, members can apply these assurance tools within their supply chains to uncover issues that, in the past, have been notoriously difficult to detect. The EICC piloted the assessments and audits in 2016 and is now poised to scale them within membership and beyond in 2017.

However, significant impact in combating forced labor must include efforts to positively influence deeper actors in the recruitment chain of foreign migrant workers in high-risk areas; specifically labor agents. To address this, the EICC held in-country trainings on the EICC Forced Labor Protocol with labor agents in Nepal and Malaysia, a key recruiting corridor in Southeast Asia for the electronics supply chain. These labor agents were trained in an intensive curriculum focusing on reducing risks of forced labor issues in recruitment. In total, 21 Malaysian and 15 Nepalese labor agents were trained over the course of two weeks, providing the first wave of deeper supply chain actors to be formally educated on EICC member expectations on Freely Chosen Employment.

The EICC recognizes that audits must be paired with innovative, context-specific programs to create sustainable change. To that end, the EICC’s Workplace of Choice (WOC) program, launched in 2015, has grown to include 20 member factories. This program employs worker surveys and training, worker-management communication systems, and a third-party worker helpline to amplify the voice of workers in operating responsible facilities. The WOC program is beginning to see tangible results, witnessing 78 percent of participating facilities making progress on the issue of recruitment fees and 71 percent on the issue of passport retention.

The Workplace of Choice program grew to 20 factories in 2016, and 78 percent of those made progress on recruitment fees while 71 percent improved on passport retention. 6

/ EICC ANNUAL REPORT 2016

EICC Labor Agent Training in Kathmandu, Nepal

Moving forward, the EICC will be exploring the formalization of these policies, programs and tools into a formal initiative titled the Responsible Labor Sourcing Initiative (RLSI). This initiative will focus on providing end-to-end forced labor due diligence capabilities to EICC members and industries that have similar worker recruitment structures. This initiative is expected to be launched in 2017.


EICC and REAP at Ceremony for Credentialed Vocational Schools in Henan Province, China

STUDENT WORKERS Vocational students in the People’s Republic of China (PRC) seeking educational opportunities through internships in industry facilities are another population of workers with potential vulnerabilities. Recognizing that these students have both opportunity and risk in the current internship system, the EICC partnered in 2014 and 2015 with Stanford University’s Rural Education Action Program (REAP), as well as EICC members Dell and Apple, to develop and pilot a credentialing system for vocational education and training (VET) schools.

Following two successful phases of the pilot, the EICC executed Phase 3 of the program in 2016. This included three areas of focus: •

Partnering with Good World Solutions to survey students in credentialed schools using the LaborLink system. This allowed us to understand the conditions under which these student internships are managed and ensure the credentialing system is providing the intended protections. Results were promising, including very low dropout rates (less than 6 percent) and a high percentage of students being paid directly by the factory (more than 90 percent).

Publicly announcing and awarding credentialed schools in the Henan province in June 2016. These 22 schools successfully completed two phases of credentialing and closed all corrective action plans.

Developing a policy brief for the national government (the State Council) about the virtues of the credentialing system. The goal of this activity is to advocate adoption of the credentialing system at the local and national government levels in the People’s Republic of China (PRC). The policy briefing is expected to be delivered in early 2017 and is a key part of the EICC’s next steps in encouraging expansion of this system.

In Phase 3 of the Student Worker program, fewer than 6 percent of the students dropped out and more than 90 percent were paid directly by the factory. EICC ANNUAL REPORT 2016 /

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RESPONSIBLE RAW MATERIALS INITIATIVE Mining is an intensive process involving potential social and environmental risks that, if not properly managed, can cause lasting negative impacts. A growing body of research suggests that these risks may be significant and associated with a variety of metals and minerals that extend beyond tin, tungsten, tantalum and gold (3TG). Governments, nongovernmental organizations (NGOs), investors, customers and other industry stakeholders are increasing their expectations on the private sector to drive responsible behavior deep in their supply chains. We have an opportunity and responsibility to include prioritized raw materials in our responsible sourcing strategies. As a multi-industry initiative, we acknowledge the challenges of achieving a state where industry can collectively understand and agree to its part in advancing responsible sourcing. The Responsible Raw Materials Initiative (RRMI) seeks to promote the common goal of understanding and contributing to mitigating the salient social and environmental impacts of extraction and processing of raw materials in supply chains, leveraging direct and indirect partnerships and using international standards, such as the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises and the United Nations (UN) Guiding Principles on Business and Human Rights, as our guideposts. Together as an industry, and working with all stakeholders, we believe we can make a difference and commit to meet expectations of current and future market, legal and regulatory instruments.

The EICC and CFSI launched the Responsible Raw Materials Initiative in November 2016. 8

/ EICC ANNUAL REPORT 2016

The RRMI launched in November 2016 at both the EICC’s Responsible Electronics Conference in Santa Clara, California and the United Nation’s Forum on Business and Human Rights in Geneva, Switzerland. The initiative received widespread exposure and attention during official sessions at both of these events as well as subsequent media attention. Many EICC and CFSI member companies have demonstrated their commitment by joining the initiative. A list of participating members and additional information can be found on the EICC website. Moving forward, the RRMI membership will initially focus on child labor issues related to cobalt mining in the DRC as well as responsible tin mining in Indonesia. Initiative sub-teams have been formed and are currently developing plans and goals for these focus areas.


CHEMICAL MANAGEMENT Protecting workers and communities from exposure to hazardous chemicals is a core component of the EICC Code of Conduct and Validated Audit Process. In recent years, the EICC formed a Chemical Management Workgroup to identify issues and develop solutions for chemical hazards in supply chains.

The EICC focused its efforts in 2016 on three areas related to improving chemical management in factory environments: • CEPN: The EICC joined the Clean Electronic Production Network (CEPN) facilitated by Green America.This multi-stakeholder effort includes participants from the academic, government, NGO, and business communities, including several EICC member companies. The goal of the CEPN is to prototype, pilot and scale effective monitoring and control systems. Teams within the CEPN are exploring avenues to prevent worker exposure to harmful chemicals by empowering and engaging workers, measuring and monitoring worker exposure, finding safer substitutions for the most harmful chemicals, and developing easier avenues for reporting process chemicals. The CEPN expects to pilot projects in volunteer facilities in 2017.

• Capacity Building: The EICC continued to build upon its support for members and their suppliers by enhancing and developing chemical management resources that reflect the most current topics and trends in worker protection and effective chemical management. In addition to online courses, several trainings on Employee Health & Safety (EHS) and Industrial Hygiene were hosted in person and in native languages for facility managers. Fact sheets and signage were developed to engage workers and managers on preventing chemical risks during product and workstation cleaning, plating and etching, bonding and gluing, painting, and chemical transportation as well as proper storage, labeling and personal protective equipment. Finally, in the recent revision to the audit protocol, we’ve clarified the minimum requirements

for worker exposure to hazardous chemicals, including ongoing opportunities to phase out hazardous chemicals and pursue safer alternatives, where feasible.

• Stakeholder Engagement: All of our chemical management work has benefited from significant feedback from well-respected NGOs and is being conducted in collaboration with civil society organizations. Engaging with stakeholders helps ensure that our protocols and member resources prioritize the issues that are of greatest concern to the people that are most directly impacted.

In 2017, the EICC will continue these efforts, with a focus on improving tools and training, working within the CEPN to begin scaling pilot projects, and further collaborating with stakeholders on possible improvements to the EICC Code of Conduct via the 2018 update.

EICC ANNUAL REPORT 2016 /

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ENVIRONMENTAL SUSTAINABILITY The EICC and its members recognize that operating responsible supply chains requires addressing local and global environmental problems. Responsible environmental management reduces facility risks caused by environmental damage, achieves greater performance through realized efficiencies, and protects worker and community health. To enable responsible practices, the EICC has continued to manage an Environmental Sustainability Workgroup that focuses on supply chain issues in Carbon and Energy, Water, and Waste. The role of the EICC has specifically focused on improving the ability to measure, track and improve performance for our members’ facilities and supply chains. Program progress in each of these categories during 2016 included:

CARBON AND ENERGY Carbon, energy efficiency, and global climate change have remained prominent issues addressed in the EICC’s Code of Conduct. Our membership in CDP’s supply chain program allows us to leverage the power of our members’ diverse supplier base to identify improvements in industry supplier performance, and opportunities for improvement and development. The 2016 EICC Supplier Report from CDP concluded that our members’ suppliers are fairly capable and cooperative regarding carbon tracking and reporting, but will need further encouragement to improve performance. The EICC continued to seek opportunities to engage with member suppliers by commissioning an industry-level Energy Savings Opportunities Scheme (ESOS) 3. study. This report outlined projects with the greatest carbon reduction potential and the quickest return on investment that would ideally suit our membership and their suppliers. The results of the CDP and ESOS reports have been made available to members, and will continue inform the EICC's Pursuit of tools that facilitate supplier efficiency.

10 / EICC ANNUAL REPORT 2016

WATER Changing water availability and quality continue to impact members’ supply chain operations. The World Wildlife Fund (WWF) conducted a water risk analysis on a pilot sampling of member suppliers. The WWF Water Risk Filter evaluates localized risks associated with water quality, availability and reputation or regulation. The highest risks for member suppliers were posed by issues of reduced water quality and flooding. The EICC worked with the Alliance for Water Stewardship to compare the environmental components of the Code of Conduct with their Stewardship Standards to evaluate water stewardship opportunities for the 2018 Code of Conduct and VAP revision cycle. The comparison determined that the Code heavily aligns with many of the core requirements of AWS; specifically an emphasis on strong management, evaluation and tracking systems. The EICC will continue to share these results and build on this initial level of risk analysis with members to find resources that will improve members’ abilities to reduce waterrelated risk and improve water use in their supply chains.

WASTE The EICC commissioned a study with the Antea Group to understand the circular economy potential in the electronics supply chain, and outline the potential facilitation rolls EICC would play. In a multi-tiered material reuse system, the EICC is best suited to coordinate multi-member pilots and offer tools and trainings. The importance of waste reduction, coupled with the opportunity for improved material efficiency will influence the resources EICC pursues for its members and their suppliers. In 2017, the EICC will move to formalize the learnings, tools and partnerships from the past several years into a supplier maturity model. This framework will enable our members to assess and develop their supply chain partners across a continuum and apply the appropriate tools and capacitybuilding to create measurable change in their supply chains.


PUBLIC PROCUREMENT The requirements to be an IT provider to public authorities in countries like the UK, Sweden, Denmark, Norway and the United States are increasingly tied to social performance. Many public authorities are not subject to confidentiality rules and are engaging with civil society organizations (CSOs) or Non-Governmental Organizations (NGOs) in new ways to help improve the social performance of their supply chains. NGOs and CSOs are increasingly working as third-party supply chain responsibility “consultants� for the public authorities in these engagements. Where public procurement agencies have become members of social programs that monitor responsible supply chain practices, these public agencies are beginning to incorporate strong social practices in their supplier contracts.

During the past year the EICC has been at the intersection of public buyers and technology companies. We have compared buyer requirements to member company willingness and capabilities. In a member survey we asked which requirements our members were willing to consider between now and 2020, and which of them they were not willing to consider. As part of the stakeholder engagement process, the EICC is conducting a series of meetings with the EICC Board of Directors, public buyers, ICT companies (members and non-members) and NGOs in the hope of creating consensus on a 2020 roadmap.

EICC ANNUAL REPORT 2016 / 11


PUBLIC POLICY In 2016 the EICC increased engagement with policymakers and governments around the world, solidifying the organization as a leader in the development and implementation of CSR supply chain solutions. Building on the 2015 launch of its public policy practice, in 2016 the EICC brought industry expertise, know-how and tools to inform policymakers as they sought to implement laws and regulations as well as form public private partnerships. This year also saw a marked increase in engagement in global forums and processes. A few highlights include: •

Led (electronic) industry input to the U.S. government on the “definition of recruitment fees” for the Federal Acquisition Regulation (FAR). Launched EICC Multi-industry Forum on Combating Forced Labor in Global Supply Chains in Kuala Lumpur, bringing together representatives from various industries with government and inter-governmental leaders. Worked closely with the European Commission to have the Conflict-Free Sourcing Initiative (CFSI) recognized as leading downstream industry solution for the EU Conflict Minerals Regulation.

EICC Executive Director Rob Lederer and ILO Deputy Director-General Gilbert Houngbo, at an OSCE Conference in Berlin, Germany

12 / EICC ANNUAL REPORT 2016

Played a high-profile role in various global forums, including at the United Nations (UN) Sustainable Development Goals (SDG) High-Level Forum in New York, delivering the keynote address at the Organisation for Security and Cooperation in Europe (OSCE) annual conference in Berlin, and at the launch of the International Labour Organization (ILO) Alliance 8.7 in New York during the opening of the UN General Assembly.

Hosted two side sessions at the UN Forum on Business and Human Rights in Geneva and led a member delegation engaging in various events.

Worked closely with the Chinese government in the area of conflict minerals and the identification of a Chinese-specific approach.

Over the past two years, the EICC has increasingly become a trusted partner to governments on key issues such as forced labor, responsible sourcing and public procurement. In 2017 we hope to build on this foundation to increase our activities and capabilities, ensuring recognition for the EICC and its members and helping to shape policy development.


STAKEHOLDER ENGAGEMENT Stakeholder engagement is a critical component of EICC activities and strategy. In 2016, we accelerated engagement with stakeholders to enhance and improve dialogue around key issues and develop common language and understanding on key topics. After an extensive mapping exercise, the EICC began regular interaction with key stakeholders to showcase EICC work, programs and tools and get critical feedback. Some highlights of these efforts include: •

Webinar with Know the Chain on Forced Labor ICT Benchmark

Launch of dialogue with socially responsible investors groups around responsible sourcing and transparency

Ongoing work with Green America on chemical management

Procurement initiatives with public buyers and technology companies

In-person stakeholder meeting and panel at the EICC Responsible Electronics conference

EICC VP of Social & Environmental Responsibility Bob Mitchell and Apple Senior Director, Supplier Responsibility Paula Pyers at EICC-ICMM Side Session During UN Forum on Business and Human Rights

EICC Executive Director Rob Lederer and UN Special Rapporteur on Trafficking in Persons Maria Grazia Giammarinaro at EICC-FTA Side Session During UN Forum on Business and Human Rights

EICC Director of Public Policy Carlos Busquets at IOE Business Event at the ILO During UN Forum on Business and Human Rights EICC ANNUAL REPORT 2016 / 13


TRAINING AND CAPABILITY-BUILDING IN-PERSON CLASSES The EICC launched a number of new courses for members and their suppliers and other interested participants in 2016. The most popular among them were the EICC Code of Conduct training and VAP preparation classes. The Code course was delivered in Malaysia and China twice, and in the U.S. after the EICC Responsible Electronics conference. The VAP preparation class was delivered in conjunction with the Code classes in Malaysia and China. In addition, a VAP Process class for auditors was added after the second set of classes in China. In all, close to 200 people were trained on the Code, close to 100 were trained in the VAP prep class and over 20 were trained in the VAP Process class. The EICC is continuing these classes in 2017 and adding new locations such as Mexico. A training in the U.S. right after the fall conference will focus on the new Code updates after the EICC undergoes its Code review process in 2017. In addition, further to the request of members through the EICC workgroups, the EICC offered two new training sessions on EHS for Managers and Industrial Hygiene, in China. These were offered in partnership with Beeree and EHS+ in China.

EICC Code of Conduct Training in Penang, Malaysia

EICC Code of Conduct Training Participants in Shanghai, China

14 / EICC ANNUAL REPORT 2016


EICC LEARNING ACADEMY Use of the online Learning Academy continued to grow with more members launching training rollouts with their staff or suppliers. At the end of 2016 there were more than 33,000 user accounts and over 34,000 course completions. In addition, there were the following increases over 2015:

Other chemical management resources that were developed and added in 2016 included a series of chemical management fact sheets for workers and managers that is available for members to download from the Academy in English and Chinese.

• 127 percent increase in course completions

Webinars added included all the Advisory Forum webinars that staff kicked off in early 2016 as a way to keep members updated on the activities of workgroups and programs at a high level. Other EICC webinars uploaded included such topics as how the industry can address forced labor in the supply chain, and alternative assessment methodologies and tools regarding process chemical evaluation in the industry.

• 112 percent increase in user accounts • 95 percent increase in number of teams (including sub-teams)

• 72 percent increase in logins EICC Courses 1-4 continue to be among the most popular courses, including the Industry Standards course, which covers the EICC Code of Conduct and is often assigned to member and supplier teams, and is available in 13 languages. Many new courses were added in 2016, including:

• Basic Chemical Training for Workers (Chinese

translation, English version added end of 2015)

For a full list of resources available, visit the Learning Academy Course Descriptions on our website Feedback on courses and the Academy itself was collected in the platform and EICC staff shared the following information with members in the Bulletin newsletter and at the annual member meeting:

• Effective Chemical Management

• 92% of learners think the Academy is easy to use

• China Social Insurance

• 86% of learners rated the courses as ‘Excellent’ or

• Supply chain security (C-TPAT) • Introduction to factory assessment • Supplier ownership courses (4 courses) • Managing air emissions • UK Modern Slavery Act (2 modules, and the original

California Transparency Act module was updated and another was added)

• EICC Validated Audit Process (VAP) Preparation and EICC Corrective Action Plan (CAP) Management (developed from the in-person courses)

‘Good’

• 60% of learners selected eLearning as their preferred training method

In addition there were high ratings on relevancy, usefulness, pace, etc. In 2017, the Academy will be the focal point for the EICC Factory Lead certificate program. Candidates will select from a pre-determined list of courses to take to earn this certificate. The EICC expects Academy usage to continue to grow as a result of this program and other member company initiatives.

There were more than 34,000 course completions in the Learning Academy in 2016, a 127 percent increase compared with 2015.

EICC ANNUAL REPORT 2016 / 15


MEMBERSHIP GROWTH EICC saw continued membership growth in 2016 despite unprecedented consolidation in the industry, which has an impact on membership due to acquisitions and mergers by other members and prospective members, and changing business models. The EICC updated its eligibility definition slightly in January 2016 to: “… companies that manufacture or contract the manufacture of electronic goods or a product in which electronics are essential to the primary functionality of the product, or supply materials used in the electronics of those goods.” This update, and the finalization of details around the new member categories launching in 2017, enabled the EICC to welcome into the fold companies from other industries such as the automotive and toy sectors. Additional onboarding resources were developed for new member suppliers who are less familiar with the EICC.

109

2015

114

2016

The EICC added 12 NEW MEMBERS FOR 2016, ending the year with

114 members,

up from 109 at the end of 2015, a net increase of 4.5 percent.

16 / EICC ANNUAL REPORT 2016


EICC LEADERSHIP CIRCLE The EICC Leadership Circle event on June 9-10, in Washington, D.C. brought together over 40 CSR executives and practitioners to discuss emerging issues facing the electronics industry and strategies to address these challenges. The event was facilitated by Caroline Rees, president of Shift. In addition, panels featured high-level representatives from government and senior-level CSR representatives from various industries.

Leadership Circle attendees were provided with the annual EICC sensing study results and issue briefs for topics identified in that study. Mega trends and their related issues were discussed, and the type of role the EICC should play in each of those issues. There was consensus on four key focus areas members want the EICC to address or continue to prioritize: Vulnerable Workers, including Forced Labor and Human Trafficking; the Ethical Sourcing of Raw Materials; the Safe Use of Hazardous Substances and Chemicals; and the transition to Smarter Audits/Beyond Audits.

EICC Leadership Circle 2016

EICC ANNUAL REPORT 2016 / 17


RESPONSIBLE ELECTRONICS 2016 The theme of the EICC’s Responsible Electronics annual conference in 2016 was “Unified for Impact,” to emphasize the fact that, together, we can make a bigger difference than any one company or organization could alone. As always, the annual conference featured top speakers from industry, civil society and government. Attendees had numerous opportunities to network with peers, and learn about and discuss solutions to top supply chain sustainability challenges. More than 350 attendees made it our largest annual conference to date.

and academia. Topics ranged from global trends in supply chain governance to regulatory compliance to public procurement to chemical management, just to name a few. Tuesday kicked off with our keynote speaker, Lisa Jackson, Apple’s Vice President of Environment, Policy and Social Initiatives, reporting to CEO Tim Cook.

In keeping with tradition, EICC staff welcomed new EICC members at a new member breakfast before the membersonly day kicked off on November 7. Twenty representatives from new member companies were in attendance to meet staff and a few EICC board members. New members had a chance to network, ask questions and learn how to get the most out of the conference week.

Throughout the conference on Tuesday and Wednesday, members and prospective members attended one-on-one meetings with staff at the always popular Education Hub. Topics included EICC-ON, the Learning Academy, VAP, member compliance, and membership.

During the members-only meeting, EICC staff reviewed the outcomes of the Leadership Circle held earlier in the year, provided a status update on current projects related to labor, the environment and VAP, and gave an overview of improvements to EICC tools and trainings. Work group and task force roundtables enabled members to discuss numerous initiatives and the day ended with an open microphone Q&A where members shared their views and asked questions about what was discussed earlier. The general and breakout sessions on the subsequent days were packed with great panelists from industry, government, intergovernmental organizations, NGOs,

The theme "Unified for Impact" emphasized the fact that, together, we can make a bigger difference than any one company or organization could alone. 18 / EICC ANNUAL REPORT 2016

Ms. Jackson shared some of her earlier experiences as the Administrator of the EPA and insights from her current role at Apple before taking questions from the audience.

One of the many highlights of the conference was the successful launch of the EICC and CFSI's Responsible Raw Materials Initiative (RRMI), which was also highlighted at an EICC-ICMM side session during the UN Forum on Business and Human Rights the following week. See the RRMI section earlier in this annual report for more information on that initiative. More than 30 member and non-member attendees participated in the EICC’s first U.S.-based, two-day Code of Conduct training. Participants learned about each provision of the Code’s five areas and also had a chance to hear valuable on-the-ground examples. The EICC’s Code training was launched in spring of 2016 and by the end of the year was delivered six times in four countries.

EICC Code of Conduct Training Participants at Responsible Electronics 2016


EICC Education Hub at Responsible Electronics 2016

EICC Work Group and Task Force Roundtables at Responsible Electronics 2016

EICC Members Meeting at Responsible Electronics 2016

EICC ANNUAL REPORT 2016 / 19


EICC MEETINGS AND EVENTS AROUND THE WORLD The EICC continued its longstanding practice of hosting outreach meetings and other events around the world to connect with partners, member and non-member companies, suppliers, governments and stakeholders. The EICC traveled to Guadalajara, Mexico, Tokyo, Japan, Brussels, Belgium and Kuala Lumper, Malaysia to discuss emerging issues and global trends, the EICC Code of Conduct, forced labor, conflict minerals, chemical management and other issues important to the global supply chain.

EICC Multi-Industry Forum in Kuala Lumpur, Malaysia

EICC-CFSI Conflict Minerals and CSR Workshop in Brussels, Belgium

On April 5, the EICC brought together more than 150 representatives from across industries, government, civil society and intergovernmental agencies to discuss innovative approaches to combat forced labor. The MultiIndustry Forum on Combating Forced Labor, which EICC co-convened along with several partners, provided an opportunity to share best practices among industries including retail, construction, agriculture, services and apparel related to improving conditions for workers; particularly migrant workers.

With over 145 participants, the EICC-CFSI Conflict Minerals and CSR Workshop in Brussels, Belgium on April 26 demonstrated the leading role multi-industry initiatives play in helping to drive responsible business across global supply chains. Headlined by Iuliu Winkler, member of the European Parliament, and Signe Ratso, Director for Trade Strategy and Analysis, Market Access, DG Trade, European Commission, the event showcased the critical role industry schemes such as CFSI will play in the implementation of EU conflict minerals regulation. Working with partners such as Digital Europe, the event was another step in the long engagement of EICC and CFSI with European policymakers, civil society and businesses in helping to ensure effective and efficient implementation of the regulation. The event also provided an overview of broader CSR issues including the increasing importance of social criteria for public procurement in Europe.

In his keynote address, U.S. Ambassador to Malaysia Joseph Yun lauded the role of the EICC in helping advocate for positive changes in Malaysia. He also cited the need for industry to engage more closely with governments and stakeholders and develop responsible business practices to help promote economic growth, trade and development.

EICC Multi-Industry Forum in Kuala Lumpur, Malaysia

EICC-CFSI Conflict Minerals and CSR Workshop in Brussels, Belgium

20 / EICC ANNUAL REPORT 2016


Outreach Meeting in Tokyo, Japan

Outreach Meeting in Guadalajara, Mexico

On June 21, the EICC held an outreach meeting in Tokyo, Japan, in partnership with JEITA, Business Policy Forum, Electronics Supply Chain Initiative Japan. Approximately 250 people attended this event, focused on emerging issues and global trends, conflict minerals, the EICC Code of Conduct 5.1, and best business practices. Speakers included representatives from EICC members Intel, Sony and Tokyo Electron, as well as from IBIDEN and Panasonic.

More than 120 participants attended the EICC Outreach Meeting in Guadalajara, Mexico on September 7. The session featured emerging issues and global trends, a detailed overview and update on the EICC Code of Conduct, chemical management, and EICC tools and training. Mexican government officials presented recent changes in Mexican labor law and met with EICC staff to discuss areas of collaboration.

EICC Outreach Meeting in Tokyo, Japan

EICC Outreach Meeting in Tokyo, Japan

EICC Outreach Meeting in Guadalajara, Mexico

EICC ANNUAL REPORT 2016 / 21


CONFLICT-FREE SOURCING INITIATIVE (CFSI) In 2016 CFSI membership grew in size and diversity. The CFSI now has more than 350 members that are headquartered around the globe and represent over 10 different industries. The CFSI also welcomed two new association members and five vendor members in 2016. This diversified membership base and increased smelter participation is a huge asset for the organization and to stakeholders broadly as continued uptake of supply chain due diligence systems offers benefits to many stakeholders considering the scale of shared supply chains. The CFSI also rolled out a new audit firm and auditor accreditation process, re-approving two existing audit firms and selecting three new audit firms to ensure capacity and quality for the growing audit program. At the end of 2016, 82 percent of identified smelters for all four metals – tin, tantalum, tungsten and gold (3TG) – were participating in the CFSI’s Conflict-Free Smelter Program (CFSP). The CFSP continues to support programs that further incentivize participation in independent thirdparty audit programs, such as the LBMA and RJC, and responsible sourcing from conflict-affected and high-risk areas, through initiatives such as the Better Sourcing Program (BSP), European Partnership for Responsible Minerals (EPRM), iTSCi, and the Public-Private Alliance for Responsible Minerals Trade (PPA). In 2016 the CFSI also engaged smelters and members in an extensive protocol review that is ongoing in 2017. New protocols will place increased emphasis on the review of supply chain management systems, public reporting on due diligence, and assessment of all OECD Annex II risks, and will apply a global definition of Conflict-Affected and HighRisk Areas, including but not limited to countries designated to be high-risk by the U.S. Dodd-Frank Act (DFA).

Partner Engagement The CFSI continued regular bilateral engagement with critical industry partners, including ITRI/iTSCi, TIC and TI-CMC. In 2016, CFSI, LBMA and RJC revitalized crossprogram coordination by initiating a joint program review to outline similarities and differences of respective standard 22 / EICC ANNUAL REPORT 2016

provisions. The three programs also worked together to create and co-host the first joint auditor training on Due Diligence for Gold Refiners.

Supporting Upstream Due Diligence The CFSI aims to raise awareness among companies about risk identification, assessment and mitigation in the mineral supply chain. As part of the CFSI’s targeted support for upstream due diligence systems, the CFSI signed an MOU with iTSCi in 2016 and processed donations to iTSCi for a total of $161,000. This support aims to encourage continual progress in upstream supply chains, increased effectiveness of downstream due diligence, and improved linkages between the two. As part of the CFSI’s linkages with iTSCi, CFSI staff conducted a review of iTSCi’s 863 reported incidents for 2016, prioritizing high-risk and potential conflict-related incidents in line with the DFA definition. As part of this process, the CFSI worked directly with iTSCi to gain further clarity on incident classification, assessment/investigation, resolution, and follow-up actions to address any confirmed risks. Out of the 863 total incidents, the CFSI reviewed all level 1 (high-risk) incidents, a total of 42, and 170 level 2 (medium-risk) incidents. The CFSI also spot-checked a sample of level 3 (low-risk) incidents. At the end of 2016, 324 incidents were resolved by iTSCi, 42 were determined to be inconclusive, and 59 were unresolved. A further 438 remained open with mitigation and follow-up still in progress. The potential conflict-related incidents ranged from armed robbery to extortion, theft, smuggling, illegal taxation and unlawful fines involving armed groups. The CFSI also reviewed incidents related to OECD Annex II risks, such as human rights violations, worst forms of child labor, as well as emerging risk issues not covered under OECD Annex II, such as critical EHS incidents (e.g., mine collapses or landslides leading to fatalities). The purpose of the review was to understand the overall trends, as well as iTSCi’s incident review and resolution process, and share this information with the CFSI membership.


The CFSI continued to support critical upstream progress by participating in the PPA and joining the advisory committees of iTSCi and the BSP. In addition to iTSCi incident review, the CFSI started an incident review process with the BSP by looking at its new incident intake system and risk management process. The CFSI plans to review individual BSP incidents in 2017. The CFSI also serves as the international industry representative on the ICGLR Audit Committee and assists with the Committee’s training and capacity building. The CFSI initiated an increased level of stakeholder engagement by expanding the monthly CFSI multistakeholder calls to a broader participant base and merged this group with the Minerals Multi-Stakeholder Network led by the Responsible Sourcing Network (RSN). Finally, as a launching partner of the EPRM, the CFSI is linking with and supporting global efforts to advance responsible sourcing.

Program Improvements The CFSI enhanced its risk mitigation and continuous improvement process by launching a Grievance and Complaints Mechanism with a standardized incident receipt and response process. By the end of 2016 the CFSI received and logged 17 incidents as part of this process (incidents were entered starting July 8, 2016 and ending December 7, 2016). The largest number of allegations involved smelters and refiners, upstream programs, and mining operations. The CFSI is actively following up with relevant parties to seek resolution to the issues raised. Additionally, the CFSP initiated an expanded SOR Due Diligence process whereby all SORs participating in the program go through an initial risk assessment process before being admitted on the CFSP active list.

CFSI Annual Conference 2016

EICC ANNUAL REPORT 2016 / 23


The CFSI made two changes to the RCOI data and report in 2016. The RCOI report now includes direct and indirect sourcing information that indicates aggregate material sourcing of CFSP-Compliant Smelters, including country of origin data from supplying smelters. This information provides further insight into the origin of materials and raises awareness regarding the complexities of upstream sourcing practices. Additionally, the CFSI updated 3TG plausibility information, gathering data from the USGS, Minerals UK, ITRI and LBMA, to identify relative production of 3TG on a country-level basis. While not exhaustive, this information can be used by to better understand country of origin data and identify potential sourcing risks. In September 2016, the CFSI welcomed representatives from the OECD to conduct an OECD Alignment Assessment, which gauges alignment, coherence, and credibility of industry supply chain initiatives, including the CFSI, DMCC, iTSCi, LBMA and RJC. The assessment includes interviews with programs, selected shadow audits, and interviews with external stakeholders. The CFSI anticipates preliminary results from the alignment assessment to be available in 2017. In addition to the OECD Alignment Assessment, the CFSI initiated a long-term path of continuous improvement through ISEAL’s ongoing external validation process and peer-to-peer learning program. The purpose of becoming a full member of ISEAL is to offer a clear pathway to formalize and improve the impacts of the CFSI and the programs it operates and supports. The CFSI is preparing for a full ISEAL assessment in 2018.

CFSI eLearning Academy The CFSI works to continually improve its training and capacity-building tools. Since its launch in 2015, the CFSI eLearning Academy gained a total of 2,967 accounts and 671 users have attended at least one course. The CFSI developed a curriculum of 27 complementary courses for members, suppliers, stakeholders, auditors, smelters and refiners. With a total of 1,520 course completions, the most popular lesson was on Conflict Minerals, which has been completed 568 times. Examples of new courses offered in 2016 include: Supplier Capacity Building and a Smelting & Refining 101 series for Tin, Tungsten and Gold.

Responsible Raw Materials Initiative (RRMI) Launch In November 2016, the EICC and CFSI co-launched the Responsible Raw Materials Initiative (RRMI), which seeks to promote the common goal of understanding and contributing to mitigating the salient social and environmental impacts of extraction and processing of raw materials in supply chains. For more information about this initiative, see the RRMI section earlier in this annual report.

CFSI at OECD Meeting in Paris, France

24 / EICC ANNUAL REPORT 2016


Strategic Planning In August 2016, the CFSI launched a process to develop a five-year strategic plan with CFSI's Steering Committee and a group of external stakeholders, including the Enough Project, Global Witness, OECD, Pact, PPA, Responsible Sourcing Network, and the U.S. State Department. This group vetted a series of organizational success statements and shared feedback on the CFSI's strengths, successes, gaps and future development. Based on this input, CFSI staff drafted a strategic plan that covers approaches, resourcing, and timelines for six priority areas:

• Market Acceptance - Program Credibility • Audit Programs and Workgroups • Partnerships and Public Affairs • Effectiveness, Success, Impact • Business Model - Financial Sustainability • Emerging Issues

COMPLIANT CFSP SORS Compliant CFSP SORs- -By ByCountry Country Compliant SORs BYCFSP COUNTRY 50 50 40 40 30 20 10 0

30 20 10 0 il az

hin

a

y an

ia es

n pa

ea or

tio

n

d an

es

at

m na

.)

5 ..

r n m C ran ail Ka Jna (1 St s et il B na Gaenry Indsoia re Fedaetio Th andited tate Vi namher 5...) pa e az Chi o a l r t Ot (1 n m i r K an e J n S e o r B a i U d e r V i d G Th ited In he ss Fe Ot Riuan Un s s Ru

MOST COMMON NON-CONFORMANCES 6% 11% 37%

17%

The strategic plan serves as a road map for making continued, measurable progress in each priority area, including engagement on important new issue areas, while ensuring the organization's membership health and financial sustainability.

11%

18%

The Conflict Minerals Policy is not embedded into the SOR's standard operating procedures The Conflict Minerals Policy is not trained to relevant personnel The Conflict Minerals Policy is not publicly communicated The SOR does not have a process for allocating unique lot numbers to incoming materials The SOR was not able to provide adequate origin validation for all non-secondary materialsr receipts Other (20 types of non-conformances)

At the end of 2016, 82 percent of identified smelters for tin, tantalum, tungsten and gold were participating in the CFSI’s Conflict-Free Smelter Program. EICC ANNUAL REPORT 2016 / 25


VALIDATED AUDIT PROCESS (VAP) Enhancing the VAP to add value to the program for members, stakeholders and factories was a top priority in 2016. Also, in the past, the primary users of the VAP were traditional electronics companies but in 2016 we saw greater use from the automotive, toy and retail industries. With this added focus and attention additional opportunities for enhancements became apparent. Through member and stakeholder feedback the following improvements were made to the VAP program.

VAP Recognition Program EICC members recognize that the value of an audit program is not simply to identify issues in the supply chain but to correct them and sustain that improvement. To help achieve this goal the EICC launched a three-tier recognition program for factories that use the VAP program. After an initial VAP audit (no CMA/AMA), a factory receives an audit report outlining the non-conformances and conformances to the EICC Code of Conduct. From there the factory creates a corrective action plan to identify the root cause of the nonconformances, contain and correct the issues, and prevent recurrence. Once the corrective actions are in place and verified during a VAP Closure Audit, the factory may receive recognition from the EICC. The EICC offers three levels of recognition:

PLATINUM: for factories with a minimum audit score of 200 and all Priority, Major and Minor findings closed

GOLD: for factories with a minimum audit score of 180 and all Priority and Major findings closed

SILVER: for factories with a minimum audit score of 160 and all Priority findings closed

Additional details on the VAP Recognition Program can be found on the EICC website.

26 / EICC ANNUAL REPORT 2016

Supplemental VAP on Forced Labor The EICC determined there was a need for a VAP Audit specifically designed to recognize and address forced labor. Through a year-long partnership with Verité, a Forced Labor SAQ for labor agents and factories was developed. Once the SAQ was complete it was piloted in Malaysia with both factories and labor agents. The pilot led to some minor adjustments to the SAQ and then evolved into the EICC Supplemental VAP Audit on Forced Labor. The Supplemental VAP is now available as an add-on to a standard VAP or a stand-alone audit. The Supplemental VAP is still in its early phase and will be part of the Responsible Labor Sourcing Initiative (RLSI) mentioned earlier in this annual report.

VAP Operations Manual Updates The VAP Operations Manual is the complete program outline document including guidance for auditees, auditors and those who accept the VAP program as demonstration that a factory has met their social and environmental expectations. This manual was over 300 pages and used in multiple countries. The original manual was created nearly a decade ago when the VAP was first documented and wider adoption began globally. Since that time, each Code revision would result in an update to a portion of the manual. In 2016, however, a complete refresh of the document was conducted. This 3. included changing to a principles-based document, adding tables and charts to simplify the message and making minor corrections or clarifications. In order to maintain the integrity of the program multiple groups were involved in the update including the EICC Board of Directors, the nine approved audit firms, and member companies. The effort was led by our fourth-party Audit Program Manager with oversight from the VAP staff. The manual was completed in October and approved by the Board of Directors in November. Webinars were recorded for members and auditors. During the December Auditor


Summit in Hong Kong, auditors were trained on the changes. The manual was published for members and auditors in December 2016 and went into effect on Feb. 15, 2017.

VAP Audit Tracker Improvements Member companies have visibility to the complete list of upcoming VAP audits as well as any audits conducted in the last two years, using the VAP Audit Tracker. In 2016 the EICC made improvements to the tracker to further reduce audit fatigue. Members can see factory-level details about recent audit activity and ask to be part of an audit through a form called “Attachment B.� By being added to Attachment B, members will receive a copy of the final VAP audit report and not need to audit that facility again until the audit expires (audits are considered active for 24 months). In addition to the transparency this tool provides, it also is useful for identifying when an audit will expire and when a new initial audit should be scheduled.

VAP Report Card The EICC’s fourth-party Audit Program Manager (APM) that helps provide oversight of the audit program and ensure auditor quality conducted a materiality analysis that resulted in a new program where each audit is rated on Quality, Professionalism and Timeliness. Each audit, and the lead auditor for that audit, receive a Report Card with a rating for each category. Quality is 50 percent of the

score, Professionalism is 35 percent, and Timeliness is 15 percent. These elements are combined in an algorithm with auditor qualifications, price and availability to help the APM assign future audits. In this program, not only does the audit firm know how they performed on each audit, but when the data is aggregated with other auditors from the same firm, the audit firm also has a score. This is just one way we are driving additional data into the assignment of audits to increase the credibility of the VAP program to external stakeholders.

EICC-ON In 2016 the EICC reviewed its existing information management platforms and made the decision to replace its primary risk assessment system, known as EICC-ON. This tool is widely used by a majority of EICC members to analyze and manage supplier risks in the supply chain, utilizing key features such as Self-Assessment Questionnaires (SAQs), audit sharing, and environmental reporting. There was an extensive review of the options available, including a variety of licensing models, internal development and potential software vendors. After careful consideration, a formal bidding process, and feedback from various stakeholders, we decided to team with an organization that owns one of the most well-known global audit sharing IT platforms. The EICC spent the second half of the year deeply engaged in the software development efforts of launching the new platform, which prepared us for the launch of the new EICC-ON in January 2017.

EICC ANNUAL REPORT 2016 / 27


VAP AUDITS: BY THE NUMBERS VAP AUDITS PERFORMED Initial Audits

AVERAGE AUDIT SCORE

Closure Audits

Initial

375

343

Closure

155.6

Score Improvement

127.4

121.7

154.1

163

161

+33.9 2015

2016

+26.7

2015

2016

The number of Initial Audits increased from 2015 to 2016 and the Initial Audit scores increased year-over-year as well. Closure Audit scores decreased slightly in 2016 and average score improvement from Initial to Closure Audit decreased as a result of increased Initial Audit scores.

51%, 273 TOTAL

CHINA 8%, 43 TOTAL

MALAYSIA

7%, 39 TOTAL

CHINESE TAIPEI

5%, 25 TOTAL

THAILAND

4%, 21 TOTAL

MEXICO

3%, 18 TOTAL

UNITED STATES SINGAPORE

3%, 14 TOTAL

PHILIPPINES

2%, 13 TOTAL 2%, 11 TOTAL

SOUTH KOREA

2%, 9 TOTAL

JAPAN

2016 AUDITS

1%, 8 TOTAL

BRAZIL INDIA

1%, 7 TOTAL

VIETNAM

1%, 6 TOTAL

BY COUNTRY

1%, 4 TOTAL

HUNGARY 19 OTHER COUNTRIES

9%, 47 TOTAL 0

50

100

150

200

250

In 2016, factories in 33 countries were audited. The largest number of audits by country were conducted in China, which represented half of all audits, followed by Malaysia, Chinese Taipei, Thailand, and Mexico.

28 / EICC ANNUAL REPORT 2016

300


TOP 10 OVERALL FINDINGS IN 2016 SECTION

Section % of Top 10

A6.3 7.0%

E4.1 7.0%

A3.3 16.8%

C7.2 7.3%

2016 VAP Top 10 Overall Findings

B3.1 8.0% C3.1 8.3%

B2.4 8.5%

Average hours worked in a workweek over the last 12 months does not exceed 60 hours or the legal limit (whichever is stricter)

A3.2

Workers receive at least one (1) day off every seven (7) days

A3.3

Adequate and effective policy and system/procedures are established to determine, communicate, record, manage, and control working hours including overtime, including reliable and detailed records of workers’ regular and overtime working hours

A6.3

Reasonable accommodation for religious practices is provided

B1.2

Worker exposure to potential safety hazards (e.g. electrical and other energy sources, fire, vehicles, and fall hazards) are controlled through proper design, engineering and administrative controls and safe work procedures

B2.3

All potential emergencies that could affect the site are identified and assessed, and adequate and effective emergency preparedness and response programs (plans/procedures) are established

B2.4

Effective emergency exit access, exits, and exit discharge are adequate in number and location, readily accessible, and properly maintained

B2.5

Adequate and effective fire and other emergency evacuation and response drills are conducted with all employees, and records are maintained

B3.1

All required permits, licenses and test reports for occupational safety are in place and a process is implemented to ensure permits and licenses are up to date at all times

C3.1

Hazardous materials including wastes are properly categorized, labeled, handled, stored, transported and disposed using government-approved and/or licensed vendors as per local laws

C7.2

Adequate and effective procedures are in place to prevent storm water contamination and prevent discharges and spills from entering storm drains

E4.1

An Adequate and effective risk management process to identify, assess, and minimize/ mitigate/control its risks in the areas of: A) Labor B) Health & Safety C) Environment and D) Ethics is in place

E12.2

An effective process to ensure that the next tier major suppliers implement the EICC Code

E12.2 10.4%

B2.3 6.9%

B2.5 7.5%

A3.1

A3.1 15.3%

A3.2 11.3%

A3.3 17.6%

C3.1 7.7% E12.2 7.7%

2015 VAP Top 10 Overall Findings

B1.2 7.8% B3.1 8.8%

A3.1 16.5%

B2.4 10.1%

QUESTION

A3.2 9.4%

EICC ANNUAL REPORT 2016 / 29


TOP FINDINGS BY COUNTRY COUNTRY

China

Chinese Taipei

Korea

Malaysia

Thailand

SECTION

FINDINGS

Working Hours

421

Emergency Preparedness

299

Occupational Safety

179

Working Hours

32

Emergency Preparedness

22

Occupational Safety

13

Working Hours

13

Emergency Preparedness

13

Freely Chosen Employment

8

Working Hours

70

Freely Chosen Employment

53

Emergency Preparedness

51

Working Hours

32

Emergency Preparedness

11

Supplier Responsibility

8

Working hours continues to be the top issue found by audits, followed by emergency preparedness and occupational safety.

30 / EICC ANNUAL REPORT 2016


INDIRECT SPEND The EICC has long supported risk assessments, selfassessments and even VAP audits for services suppliers but they have been gaining traction in recent years. In 2016 there was a strong push from membership to create more specific SAQs for some services suppliers, including Labor Agents, Call-Centers, Facilities, and Branded-Merchandise. For each custom SAQ we partnered with an external expert and drafted a sector-specific checklist that would help members assess risk for these indirect suppliers. The SAQs were pressure-tested by members in Q2 and Q3. In Q4 it was decided that it was time to incorporate these voluntary tools into EICC-ON and, during the meeting at the EICC Responsible Electronics conference in November, this effort was added to the 2017 workgroup charter and IT roadmap.

EICC ANNUAL REPORT 2016 / 31


ASSESSING PRIORITIES AND SENSING EMERGING RISKS In 2016 the EICC conducted its annual “sensing” exercise with the help of BSR to prioritize current social, environmental and ethical issues significant to EICC members and stakeholders while also examining emerging risks that may increase in importance. This annual study is one of many inputs that complement the EICC’s strategic planning, workgroup and taskforce activities. For the 2016 sensing assessment map that follows, we assessed 31 issues that broadly fall across the four categories of labor and human rights, health and safety, governance and ethics, and environmental issues.

Our data inputs, which were weighted and mapped to a sensing grid, included member and stakeholder survey results, VAP and SAQ findings, news media mentions, and a qualitative component from BSR. There were some notable shifts in 2016 when compared with the 2015 assessment. For example: “transparency and reporting” moved into the upper-right quadrant, “forced labor” moved higher and was nearly equal for both axes, “e-waste” and “climate change” were very high on the Y axis, and “energy management” and “material restrictions” moved closer to the upper-right quadrant.

The Top 5 overall issues for 2016 versus 2015 were, in descending order:

2016

2015

1. Forced Labor and Human Trafficking

1. Fair Wages and Benefits

2. Safe Use of Hazardous Substances and Chemicals

2. Working Hours

3. Occupational Safety 4. Child Labor 5. Working Hours

32 / EICC ANNUAL REPORT 2016

3. Occupational Safety 4. Forced Labor and Human Trafficking 5. Safe Use of Hazardous Substances and Chemicals


IMPORTANCE TO SUPPLY CHAIN SUSTAINABILITY

2016

EICC SENSING ASSESSMENT MAPS

IMPORTANCE TO SUPPLY CHAIN SUSTAINABILITY

2015

IMPORTANCE TO EICC MEMBER COMPANIES

IMPORTANCE TO EICC MEMBER COMPANIES

EICC ANNUAL REPORT 2016 / 33


FY 2016 FINANCIAL HIGHLIGHTS

FY 2016 OPERATING REVENUE

$10,109,994

FY 2016 OPERATING EXPENSES

$9,298,132

4%

6%

EVENTS

OTHER

11%

PROGRAMS

33%

41%

27%

ADMINISTRATIVE

MEMBERSHIP DUES

CFSI

27% CFSI

25%

VAP AUDITS

25%

VAP AUDITS

*The EICC’s fiscal year runs from January 1 through December 31. These numbers have not yet been audited. Percentages may not total 100 due to rounding.

34 / EICC ANNUAL REPORT 2016


SENIOR LEADERSHIP, BOARD AND STAFF BOARD OF DIRECTORS 2016

BOARD OF DIRECTORS 2017

Kathleen A. Shaver

Carolyn Duran

EICC Board Chair, and Director, Sustainability, Risk and Compliance, Cisco

EICC Board Chair, and Director, Supply Chain Sustainability, Intel

Todd Melendy

Paula Pyers

Carolyn Duran

Todd Melendy

Marco Baren

Anthony DePaoli

EICC Board Treasurer, and Vice President - Sustainability & Compliance, Celestica Inc.

EICC Board At-Large Representative, and Director, Supply Chain Sustainability, Intel

Head of Supplier Quality, Supplier Development and Supplier Sustainability Group Procurement, Philips

EICC Board Vice Chair, and Senior Director, Supplier Responsibility, Apple Inc.

EICC Board Treasurer, and Vice President - Sustainability & Compliance, Celestica Inc.

Vice President, Compliance, Amkor Technology

Kevin Caffey

Marco Baren

Andrew E. Cuthbert

Harinder Jeet Kaur

Vice President, Quality and Reliability, Qualcomm

Director, Environmental Health & Safety and Business Continuity Planning, Western Digital

Head of Supplier Quality, Supplier Development and Supplier Sustainability Group Procurement, Philips

Global Social Responsibility Director, Molex

Harinder Jeet Kaur

Glenn Leon

Glenn Leon

Hamlin Metzger

Global Social Responsibility Director, Molex

Senior Vice President, Deputy General Counsel, and Chief Ethics & Compliance Officer, Hewlett Packard Enterprise

Senior Vice President, Deputy General Counsel, and Chief Ethics & Compliance Officer, Hewlett Packard Enterprise

Director, Corporate Responsibility & Sustainability, Best Buy

Hamlin Metzger

Michael Meston

Director, Corporate Responsibility & Sustainability, Best Buy

Vice President, International Human Resources, Western Digital Corporation

Mark Pringle

Mark Pringle

Paula Pyers

Mary Wroten

Senior Vice President, Global Market Commodities & Indirect Procurement, Dell

Senior Director, Supplier Responsibility, Apple Inc.

Senior Vice President, Global Market Commodities & Indirect Procurement, Dell

Global Purchasing Senior Manager, Supply Chain Sustainability, Ford Motor Company

EICC ANNUAL REPORT 2016 / 35


EICC STAFF 2017

EICC STAFF 2017

Rob Lederer

Marianna Smirnova

Deborah Albers

Khai Yau Chua

Vice President of Operations

Program Manager

Bob Mitchell

Daniel Reid

Vice President of Social and Environmental Responsibility

Environmental Program Manager

Christine Briscoe

Andrea Gilders

Vice President of Member Services and Human Resources

VAP Account Manager

Chee Keong Lai

Mann Chyun Sim

Senior Director of Risk Assessments and Compliance

Key Account Manager

Leah Butler

Ross Landis

CFSI Program Director

Database Project Manager

Jarrett Bens

Gavin Wu

Director of Communications

CFSI Program Associate

Carlos Busquets

Kyle Rand

Director of Public Policy

Software Support Technician

Kenneth Anderson

Steve Moloney

Director of Information Technology

Chief Financial Officer

Michèle Brßlhart Banyiyezako

Chuck Williams

Executive Director

Technical Director

Valerie Esty

Meetings and Member Services Manager

Hillary Amster

CFSI Program Manager

36 / EICC ANNUAL REPORT 2016

CFSI Project Manager

Accounting Manager


EICC MEMBERS AS OF APRIL 2017 AMERICAS

EMEA

ASIA

3M

Lexmark

ASML Holding

AcBel Polytech Inc.

Advanced Micro Devices

Logitech Inc.

Atea ASA

Acer Inc.

Amazon.com Inc.

Marvell Technology Group Ltd

Edwards Ltd

Advanced Semiconductor Engineering, Inc.

Amkor Technology, Inc.

Micron Technology, Inc.

Nielsen

ASUSTeK Computer Inc.

Amphenol Corporation

Microsoft

NXP

Chicony Electronics Co., Ltd

Analog Devices, Inc.

ModusLink

Philips

Compal Electronics, Inc.

Apple, Inc

Molex Incorporated

Philips Lighting

Foxconn

Applied Materials

Motorola Solutions

Sky CP Ltd

Fujitsu Limited

Arista Networks, Inc.

NetApp

STMicroelectronics N.V. International

HTC Corp.

ARRIS

Netgear

Technicolor SA

Huawei Technologies Co., Ltd.

Avaya Inc.

Nu Mark

TomTom International BV

Inventec Corporation

Best Buy

Nvidia Corporation

TT Electronics Plc

Konica Minolta, Inc.

Brocade Communications Systems, Inc.

ON Semiconductor

Lenovo

Oracle America, Inc.

LG Electronics

Plexus Corp.

Longwell Company

Polycom

New Kinpo Group

Qorvo

Pegatron

Qualcomm

Powertech Technology Inc.

Sanmina-SCI

Quanta Computer Inc.

Dell Inc.

Seagate Technology

Samsung Electronics

Fabrinet

Semtech Corporation

Senju Metal Industry Co., Ltd.

Fitbit, Inc.

Sierra Wireless, Inc.

SK Hynix Inc. - Icheon

Flex

Skyworks Solutions, Inc.

Sony Corporation

Ford Motor Company

SMART Modular Technologies, Inc.

Taiwan Chinsan Electronics Industrial Co., Ltd.

Celestica Ciena Limited Cisco Systems Inc. Citrix Systems Cypress Semiconductor Corp.

General Electric GlobalFoundries U.S. Inc. Hasbro, Inc. HP Inc. HPE IBM Corporation Infineon Technologies Americas Corp.

Snap, Inc.

Taiwan Semiconductor Manufacturing Company, Ltd. (TSMC)

SunEdison, Inc.

Tokyo Electron Limited

Symantec

Toshiba Corp.

Syncreon

Wistron Corp.

Tesla, Inc.

XP Power LLC

Texas Instruments Veritas

Intel Corporation

Vishay Intertechnology

Jabil

Western Digital

Juniper Networks

Xerox

Keurig Green Mountain, Inc. Zebra Technologies Corporation Kingston Technology Company, Inc KLA Tencor EICC ANNUAL REPORT 2016 / 37


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