Issuu on Google+


TABLE OF CONTENTS EXECUTIVE SUMMARY

3

APPROVING AND IMPLEMENTING THE STRATEGIC PLAN

4

STRENGTHENING OUR CODE OF CONDUCT

5

COMBATING FORCED LABOR

6

PROTECTING STUDENT WORKERS

7

TRAINING AND CAPABILITY-BUILDING 10 EXCHANGING IDEAS AMONG MEMBERS AND STAKEHOLDERS 12 EXPANDING OUR SPHERE OF INFLUENCE AND IMPACT

16

IMPROVING ACCOUNTABILITY 20 VAP AUDITS: BY THE NUMBERS

21

THE CONFLICT-FREE SOURCING INITIATIVE (CFSI)

24

INCREASING FOCUS ON ENVIRONMENTAL ISSUES

28

TACKLING INDIRECT SPEND 30 ASSESSING PRIORITIES AND SENSING EMERGING RISKS

30

FY 2015 FINANCIAL HIGHLIGHTS 32 SENIOR LEADERSHIP, BOARD AND STAFF

2

/ EICC ANNUAL REPORT 2014-2015

33


EXECUTIVE SUMMARY The EICC underwent significant changes in 2014 and 2015 that helped propel the organization forward, including revisions to our Code of Conduct, the hiring of additional professional staff, and the expansion of many programs and initiatives. In 2015 we built on that momentum to meet the rising expectations of governments, industry and other stakeholders around the world. As we implement the EICC Strategic Plan, we continue to expand the EICC’s sphere of influence and its impact on the global electronics supply chain, the well-being of workers and their communities. EICC members have answered the call for improvement and consistently vote to strengthen the EICC Code of Conduct, further aligning it with UN Guiding Principles and other internationally recognized standards and norms, and often go far beyond local requirements. From 2014-2015 our members also completed nearly 8,000 Self-Assessment Questionnaires (SAQs) and more than 1,000 Validated Audit Process (VAP) Audits, pushing themselves and their suppliers to uncover and correct issues affecting workers worldwide. The EICC ended 2015 with 109 members, a 15 percent increase over 2014 and a dramatic increase from where we started with fewer than 10 members in 2004. This growth trend continues today, despite consolidation within some segments of our industry. With combined annual revenue of greater than $4.5 trillion, thousands of suppliers, and over 6 million direct employees, our members represent a large portion of the global electronics supply chain. Having more members and their suppliers participating in the EICC enables us to have greater reach into that supply chain and affect greater change than ever before. This is in part why our membership voted in 2015 to expand EICC member categories from two to

four (effective Jan. 1, 2017). By making room in the EICC for companies that are at different stages of the corporate social responsibility (CSR) maturity curve, we can have a much greater impact than if we only focused on those that are already advanced in CSR. The fact that EICC membership has grown so significantly over the past 11 years is a testament to the value members find in our community of practice and the tools and trainings that help them continuously improve the social, ethical and environmental performance of their supply chains. It is also a reflection of the fact that CSR is becoming more of a priority for all companies, their customers and governments. Research has shown that consumers want the companies they buy from to be responsible organizations. Increased media, NGO and government scrutiny of human rights abuses and other issues across industries has encouraged companies to look deep into their supply chains to root out forced labor, health and safety issues, conflict minerals, and other challenges. Governments have responded to such challenges with regulatory actions, international trade provisions, public-private partnerships and other initiatives, which is in part why we increased our public policy capacity in 2015. These are complex supply chain issues with multiple layers of challenges and no single solution. However, by working together and sharing best practices, a common Code of Conduct, audits, research and other data, the EICC and its members are making a difference. This annual report provides an overview of EICC accomplishments and activities in 2014 and 2015. To learn more about these and other initiatives, visit www.eiccoalition.org or contact us at info@eiccoalition.org.

OUR VISION

OUR MISSION

A global electronics industry that creates sustainable value for workers, the environment and business.

Members, suppliers and stakeholders collaborate to improve working and environmental conditions through leading standards and practices.

3


APPROVING AND IMPLEMENTING THE STRATEGIC PLAN One of the biggest successes of 2015 was member approval of the Strategic Plan and new Membership Categories. This project has been ongoing for two years and will conclude with the expansion of membership categories from two to four, effective Jan. 1, 2017. It is a significant milestone in the history of EICC. Members will be able to move between levels of membership and voluntarily demonstrate leadership through increased transparency. Full Members will have membership criteria verified. In addition, there will now be a way for organizations new to CSR to join the community of member companies as an observer until they are ready to progress through the CSR maturity curve. In this way, the EICC will be able to encourage improvement among companies that might otherwise not join the organization because of the stricter requirements of the two current categories. Engaging these additional companies will also provide the EICC with greater insight into to their supply chains, increasing opportunities to make a difference. EICC Members were very engaged throughout the process, including participation in a taskforce, webinars, in-person sessions at the annual conference, 30-day comment periods, Basecamp discussions, survey feedback, and one-on-one calls with staff.

“I’m proud to say that as a result of our strategic planning process the EICC is well-positioned for the future as the industry evolves and more companies seek to become part of the coalition and our commitment to drive responsible supply chain operations.” Kathleen A. Shaver, EICC Board Chair, and Director, Supply Chain Value Protection, Cisco

4

/ EICC ANNUAL REPORT 2014-2015

EICC members discuss new membership categories

Members approved the strategic plan and new membership categories in 2015 to expand the reach of the EICC and help more companies progress through the CSR maturity curve.


STRENGTHENING OUR CODE OF CONDUCT The EICC Code of Conduct is a set of standards on social, environmental and ethical issues in the electronics industry supply chain. The standards set out in the Code of Conduct are aligned with international norms and standards including the Universal Declaration of Human Rights, ILO International Labor Standards, OECD Guidelines for Multinational Enterprises, ISO and SA standards, and many more. The EICC Code of Conduct is reviewed every three years to ensure its relevance to international norms and issues members may face in their supply chains. Code of Conduct review processes are extensive (typically one year in duration) and follow an extensive consultation process with members and stakeholders. The EICC membership has consistently supported strengthening the EICC Code of Conduct and recent updates brought the Code into further alignment with UN Guiding Principles and strengthened provisions on freedom of association and collective bargaining, forced labor, working hours, environmental and other issues.

The hard work of amending the EICC Code of Conduct in 2014 paid off with the unveiling of EICC’s Code of Conduct 5.0, which took effect on April 1, 2015 for auditees. EICC staff traveled to outreach meetings in California, Belgium, China, Malaysia and Mexico to explain the new Code and the supporting implementation guidance. New provisions strengthened the requirements for protecting young workers, ensuring non-discrimination and freedom of association, and managing resource use, waste management, and health & safety communication. In addition to the rollout of the new Code, the membership, recognizing the need to go further in combating forced labor, approved additional strengthening of the “Freely Chosen Employment” section (A1). Additional guidance in the “Freedom of Association” section (A7) of the Code was also created to strengthen its related provisions. The new information for A1 and A7 took effect with Code of Conduct 5.1 on Jan. 1, 2016.

“Our Code of Conduct is the foundation on which the EICC was started. It has been great to see members’ unwavering support for continually strengthening the Code to protect the rights and well-being of millions of workers and their communities.” Rob Lederer, Executive Director, EICC

EICC staff traveled to meetings around the world to explain recent Code changes

5


COMBATING FORCED LABOR Since early on, a core focus of the EICC has been to improve labor and human rights conditions in the global electronics supply chain. As a coalition we’ve worked hard to deliver on this commitment. In 2014 and 2015 we provided our members with additional accountability and assessment tools; raised member and supplier awareness through new in-person and online trainings; conducted shadow audits in Malaysia with an emphasis on forced labor; convened industry, government and civil society groups in the U.S., China and Malaysia to discuss solutions; formed an EICC taskforce on trafficked and forced labor to analyze information from members and evaluate options; created a pilot program in Malaysia to help foreign migrant workers; and published a position paper on how the industry is working to eradicate forced labor in its supply chain. In addition, we made significant revisions to our Code of Conduct to better address these issues. In 2014 EICC membership ratified an updated version of the EICC Code of Conduct, which had several new provisions to further address issues that can lead to forced labor. For example, the Code now prohibits the holding of passports and other key worker documents as well as unreasonable restrictions on movement and access to basic liberties, and requires that workers are provided with a written employment agreement in their native language prior to departing from their country of origin. That version of the Code, 5.0, went into effect on April 1, 2015. Realizing that recruitment fees were becoming an increasingly problematic issue that was contributing to forced and bonded labor situations, the EICC membership overwhelmingly approved additional changes to our Code in a special, out-of-cycle membership vote that concluded on March 27, 2015. Those additional changes banning recruitment fees paid by workers went into effect on Jan. 1, 2016, in Code 5.1. These changes have been embraced by members, suppliers and other stakeholders and we expect them to significantly improve the lives of foreign migrant workers in the electronics supply chain. 6

/ EICC ANNUAL REPORT 2014-2015

Members overwhelmingly approved significant revisions to the EICC Code of Conduct in 2014 and 2015 to further combat forced labor in the supply chain.

CREATING A WORKPLACE OF CHOICE An EICC pilot program in Malaysia to help foreign migrant workers has moved to the implementation stage and is creating a way for member facilities and suppliers to become a “Workplace of Choice.” This program is an educational and capacity-building initiative that will link key stakeholders (industry leaders, factory management, civil society organizations, and workers) to help secure safe and fair labor migration practices. Key components of the program include: • Worker surveys to capture the understanding of worker profiles, demographics, journey of labor migration, pre-employment expectations, and current perceptions of the workplace • Worker-management communication systems to facilitate effective dialogues between employers and workers • Worker training to provide education on available resources and guidance on access to these resources • A worker helpline to address and support foreign migrant worker grievances

Workplace of Choice program rollout in Kuala Lumpur, Malaysia


PROTECTING STUDENT WORKERS In China, vocational education for teenagers and young adults is an important part of China’s educational and economic systems. Students at vocational schools often gain practical experience working at electronics manufacturing facilities, and these students can make valuable contributions to the global electronics industry. As young people, Chinese student workers have distinct rights and are also vulnerable to abuses. In recognition of the potential positive impact of vocational education but concerned about protecting students’ rights and wellbeing, the EICC created a Vulnerable Worker working group with an early focus on student workers in China. In 2014 the EICC, in partnership with Hong Kongbased NGO Labour and Education Service Network (LESN) and the Nanjing University Law School Labour Law Legal Mediation Programme, published a student workers management toolkit, designed to support the responsible management of student workers by electronics manufacturing facilities in mainland China. The toolkit, “Responsible Management of Student Workers: From Compliance to Best Practice,” consists of a detailed analysis of relevant

The VET credentialing program had significant impacts on student educational outcomes.

legal frameworks, a checklist, a flowchart and case studies. EICC member companies can access English and Chinese versions of the toolkit in the EICC eLearning Academy. In 2015 the EICC and Stanford University’s Rural Education Action Program (REAP), with co-funding from Apple and Dell, concluded Phase 2 of the credentialing pilot program for vocational education and training (VET) in China. Phase 2 built on the work of Apple, Dell and REAP in Phase 1. The program aims to improve the situation of student workers in VET schools, a key source of labor for the electronics industry in China, by increasing monitoring and accountability. In this pilot, schools became credentialed by meeting a strict set of criteria designed by REAP and approved by the EICC. The credentialing program had direct, statistically significant impacts on student educational outcomes:

• Improved vocational skills by 55 percent • Improved math skills by 34 percent • Reduced school dropout by 15 percent Phase 3 of this credentialing program will begin in 2016. 7


8

/ EICC ANNUAL REPORT 2014-2015


The EICC and its partners in China published a toolkit in 2014 to support the responsible management of student workers by electronics manufacturing facilities.

9


TRAINING AND CAPABILITYBUILDING LEARNING ACADEMY In April 2014 the EICC launched its Learning Academy, which has been identified as one of the four pillars in the new EICC strategic implementation plan and is key in helping members and their suppliers build their capabilities and “go beyond audits.” Fifteen months after launch more than 25,000 people from member and supplier companies were registered in the Academy and over 20,000 courses were completed. Going forward, the EICC has the opportunity to position the Learning Academy as a core component of every members’ employee and supplier training program. Short-term, this will involve recruiting and training member team leaders and key suppliers to use the tool, building a stronger course library, developing more EICC courses, and creating more “resource hubs,” with best practice case studies and webinars. Long-term, the Learning Academy will facilitate a path to leadership, by offering a curriculum for proficiency in CSR program management (at the corporate level) and EICC Code of Conduct compliance and facility management (at the factory level). Over 20 new courses, webinars and other resources, and 28 additional translations of existing courses were added to the Learning Academy in 2015. The EICC Learning Academy now contains approximately 50 modules in English, Chinese and other languages. Modules are interactive and feature on-screen and end-of-course quizzes and certificates upon successful completion. Trainings are aligned with EICC Code of Conduct elements and there are two modules on the EICC Code specifically. Additional EICC resources, such as EICC-specific courses, webinars, toolkits and working group materials are also available. Functionality added in 2015 enables Academy Team Leaders to easily upload their own materials for their teams and customize their team libraries, so the Academy could serve as an organization’s learning management system. Team Leaders can add new us-

10

/ EICC ANNUAL REPORT 2014-2015

More than 25,000 learners from member and supplier companies have accounts in the EICC Learning Academy and over 20,000 courses have been completed.

ers, assign courses, track learning and run reports. The EICC can help with bulk upload of larger staff or supplier lists and can help users define and rollout individual learning programs.

EICC CSR BOOT CAMP The EICC launched its CSR Boot Camp series, and CSR 101 class specifically, in conjunction with its annual conference in fall 2015. Twenty representatives from 13 organizations, including three non-member companies, attended the full-day session to learn more about corporate social responsibility (CSR). Attendees learned about the history and evolution of CSR and completed a CSR selfassessment, a mini-materiality analysis, a stakeholder mapping exercise and other activities. Participants heard from seasoned practitioner facilitators and CSR experts (and EICC Board members) during an afternoon panel. Opportunities for networking and questions were provided, and participants left the session with some suggested next steps mapped out for themselves and their organizations, and many additional business cards. This was the first in a series and more Boot Camp and EICC Code trainings are being added to the 2016 calendar.


New members are introduced to the EICC Learning Academy at Responsible Electronics 2015

EICC CSR Boot Camp participants learn from a panel of CSR experts

11


EXCHANGING IDEAS AMONG MEMBERS AND STAKEHOLDERS OUTREACH MEETINGS

More than 2,000 people attended EICC Outreach Meetings in 2015.

EICC Outreach Meetings take place around the world throughout the year – facilitating an exchange of perspectives, ideas and knowledge among member companies and their suppliers, government representatives, civil society organizations and other stakeholders. In 2015 the EICC gathered more than 2,000 attendees, hosting events in Mexico, Malaysia, Korea, China, Belgium and the U.S.

Attendees ask questions during an EICC Outreach Meeting in Kuala Lumpur, Malaysia

12

/ EICC ANNUAL REPORT 2014-2015


RESPONSIBLE ELECTRONICS Responsible Electronics is the EICC’s biggest event of the year, focused on corporate social responsibility in the global electronics supply chain, with top speakers from industry, civil society and government. Attendees network with peers, learn about and discuss solutions to top supply chain sustainability challenges. In September 2015, the EICC welcomed more than 300 attendees to its annual Responsible Electronics conference in San Jose, California – its largest number of conference attendees to date. Responsible Electronics 2015 featured expert speakers and panelists from government, industry and NGOs on topics ranging from future trends and challenges in the supply chain to emerging regulations to creative approaches regarding risk assessment to human rights and environmental issues. Attendees stayed busy between sessions by talking with exhibitors, networking during coffee breaks and receptions, and visiting our Education Hub to learn about EICC tools and other resources.

EICC Executive Director Rob Lederer addresses attendees at Responsible Electronics 2015

The EICC’s efforts and sincere commitment to supporting the rights and wellbeing of workers and communities worldwide affected by the global electronics supply chain have enabled it to form strong relationships with industry, U.S. and foreign government agencies, NGOs and other organizations focused on these issues. A growing membership base has also expanded its reach and influence.

Attendees networking at Responsible Electronics 2015

13


14

/ EICC ANNUAL REPORT 2014-2015


The EICC’s Responsible Electronics annual conference draws top speakers from industry, civil society and government to talk about corporate social responsibility.

Responsible Electronics, China 2014

15


EXPANDING OUR SPHERE OF INFLUENCE AND IMPACT Representatives from the European Commission and USTR on an EICC panel at Responsible Electronics 2015

PUBLIC POLICY ENGAGEMENT As governments around the world are increasingly regulating CSR supply chain issues, the EICC created a public policy function in 2015 to engage constructively and ensure that industry views, experience and practices were effectively represented. The EICC does not act as a lobbyist, but rather serves as a hub for public-private collaboration around best practices derived from our wide range of tools, programs and initiatives. In 2015 the EICC quickly engaged across a number of policy issues to raise awareness and ensure new regulations are implemented in an effective and efficient manner, with strong industry input. Key highlights in 2015 include: • Launch of an EICC Public Policy Advisory Group and strategy • Several events with U.S. and Malaysian governments on forced labor • Engagement with the U.S. government on Federal Acquisition Regulation (FAR) to help shape implementation of new rules on human trafficking 16

/ EICC ANNUAL REPORT 2014-2015

In 2015 the EICC quickly engaged across a number of policy issues to raise awareness and ensure new regulations are implemented in an effective and efficient manner.

• Discussions with the European Commission around proposed conflict minerals legislation – stressing the role of CFSI for downstream industry • Led global industry response on the UK Modern Slavery Act • Engagement with the Chinese government on emerging CSR Guidance • Recognition of the EICC as a leading industry body at several global forums, including the UN Forum on Business and Human Rights, and the Global Compact Business and Sustainable Development Goals Forum


MEMBERSHIP GROWTH

STAKEHOLDER ENGAGEMENT

The EICC ended 2015 with 109 members, a 15 percent increase over 2014 and a dramatic increase from where we started with fewer than 10 members in 2004. This growth trend continues today, despite consolidation within some segments of our industry. With combined annual revenue of greater than $4.5 trillion, thousands of suppliers, and directly employing over 6 million people, our members represent a large portion of the global electronics supply chain. Having more members and their suppliers participating in the EICC enables us to have greater reach into that supply chain and affect greater change than ever before.

Building on the EICC Stakeholder Advisory Group (SAG), which provided input into the latest version of our Code of Conduct, we increased engagement with stakeholders across many issue areas in 2015. For example, we helped industry address the “chemical challenge” by conducting a gap analysis with the EICC’s Code of Conduct and developing capacity-building trainings. We also worked with stakeholders on corporate transparency regulations, such as the UK Modern Slavery Act and the California Transparency in Supply Chains Act, and engaged several NGOs to discuss EICC efforts to combat forced labor in the global supply chain.

2014

95

2015

15%

INCREASE

109 EICC on a panel at a Concordia labor trafficking event in Washington, D.C. in 2015

OVER 2014

17


18

/ EICC ANNUAL REPORT 2014-2015


The EICC holds meetings around the world to help members continuously improve in areas including labor and human rights, health and safety, governance and ethics, and the environment.

EICC Outreach Meeting in Guadalajara, Mexico

19


IMPROVING ACCOUNTABILITY VAP UPDATES The Validated Audit Process (VAP) is the guideline for how all EICC members and their suppliers should operationalize our Code of Conduct. In 2014 the VAP workgroup oversaw the audit protocol and process, including managing two rounds of VAP Protocol revisions (4.0.3 and 5.0), continuing to work with EICC staff and the audit program manager (APM) to improve audit program efficiency and effectiveness, and beginning to develop education and communication materials around the VAP program. The group also helped manage an environment, health, and safety (EHS) enhancement to the Protocol, and the development and deployment of the new self-assessment questionnaire (SAQ). In 2015 the VAP workgroup introduced an additional Protocol revision (5.1), worked with Verisk-Maplecroft on the creation of a new Risk Assessment tool for members, managed changes to EICC-ON related to VAP, and transitioned to a new Audit Program Manager (APM).

NEW RISK ASSESSMENT TOOL To improve and complement the overall risk assessment process for its members, the EICC partnered with Verisk-Maplecroft in 2015 to create a new tool for supplier Risk Assessment analysis. This tool utilizes the vast knowledge base of Maplecroft’s inherit risk calculations, and integrates it with the five pillars of EICC’s Code of Conduct to produce a single RA1 score for each supplier. The scores are then color-coded to provide a quick “Red-YellowGreen” view of a member’s suppliers. Other features include an interactive risk map that shows an overlay of a user-selected risk element on a global map, as well as an analytics page that displays average risk scores, location counts, pillar averages, and many other statistics.

20

/ EICC ANNUAL REPORT 2014-2015

EICC-ON ENHANCEMENTS In 2015 the capabilities of EICC-ON grew significantly to better support the VAP. All EICC members and suppliers store their Self-Assessment Questionnaires (SAQs) in the system. This was the first year that all initial audit reports were uploaded directly into the system, a process that allows for subsequent generation of closure audit reports and re-scoring the VAP when a closure audit is completed. This enhanced audit storage also increases sharing capability among customers. The visibility of Corrective Action Plans is another feature that has grown this year. EICC-ON now gives the staff more options for generating reports based on the data collected.

NEW AUDIT PROGRAM MANAGER After thorough evaluation of how to best support its growing audit program, in 2015 the EICC decided to move to a new Audit Program Manager (APM) that would provide new data tools and enhanced customer service. This idea aligned closely with changes that the EICC had already put into place earlier that year to help members and auditees obtain better service. Sumerra began operating in the APM role in September 2015, participated in the EICC Auditor Summit the following month to build working relationships with the audit firms, and completed the transition by December of 2015.

NEW OFFICE IN MALAYSIA The EICC opened a new office in Kuala Lumpur, Malaysia in 2015. The main focus of the office is to coordinate the growing VAP program.


VAP AUDITS: BY THE NUMBERS 2014-2015 VAP AUDITS

The number of Initial Audits increased from 2014 to 2015. Initial and Closure Audit scores also increased year over year as did the score improvement from Initial to Closure Audit.

2014-2015 AUDITS BY COUNTRY

Factories in 35 countries were audited each year, covering the primary countries that manufacture electronics. The largest number of audits by country were conducted in China, followed by Malaysia, Thailand, Taiwan, South Korea and Mexico.

21


TOP 10 OVERALL FINDINGS Section % of Top 10

2014 VAP Top 10 Overall Findings

SECTION

2015 VAP Top 10 Overall Findings

QUESTION

A3.1

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

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

B1.3

Appropriate Personal Protective Equipment (PPE) is consistently and correctly used where required to control safety hazards and worker exposure

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

B3.4

Adequate first aid kits to provide medial treatment for injured or ill workers are in place

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

E12.2

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

Issues related to working hours continue to appear high in the Top 10 findings. Other Top 10 findings include issues related to occupational safety, emergency preparedness, and hazardous substances. 22

/ EICC ANNUAL REPORT 2014-2015


TOP FINDINGS BY COUNTRY COUNTRY

China

Korea

Malaysia

Taiwan

Thailand

SECTION

CODE TEXT

2015 RANK

A3.3

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

1

A3.1

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

2

B1.1

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

3

B2.5

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

1

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

2

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

3

A3.3

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

1

A3.1

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

2

A3.2

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

3

A3.3

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

1

A3.1

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

2

E12.2

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

3

A3.3

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

1

A3.1

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

2

E12.2

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

3

Working hours continues to be the top issue in the countries in which the most audits were conducted. Health and safety concerns are also represented in top findings from these countries.

23


THE CONFLICT-FREE SOURCING INITIATIVE (CFSI) EXPANDS ITS REACH CFSI 2015 annual meeting in San Jose, California

79%

In 2015 the Conflict-Free Sourcing Initiative (CFSI) improved the quality of its audit program by increasing staff, building and implementing new internal data and tracking systems, and re-orienting the Smelter Engagement Team into a more focused workgroup. CFSI enhanced its tools by launching an eLearning Academy, delivering smelter webinars and launching an online Smelter Database, improving the quality and ease of access of data provided to smelters, CFSI members and external stakeholders.

of identified smelters for 3TG are participating in the CFSI’s Conflict-Free Smelter Program.

Following the first company filings to the SEC on June 2, 2014 under the Conflict Minerals Rule, the CFSI and Schulte Roth & Zabel LLP, a leading law firm in Conflict Minerals Rule compliance, released an analysis of those filings. The Conflict Minerals Reporting white paper contained key takeaways and provided recommendations for ongoing compliance. The CFSI published an update to another white paper in 2015, Five Practical Steps to Support SEC Conflict Minerals Disclosure, which reflected the latOre from a tantalum mine in the DRC

24

/ EICC ANNUAL REPORT 2014-2015


est thinking about the relationship between the OECD Guidance and the SEC Rule and suggested activities companies may undertake when implementing their compliance programs. In 2014 and 2015 the CFSI published updates to its Conflict Minerals Reporting Template (CMRT), the leading multi-industry tool to facilitate transfer of information throughout the supply chain in support of conflict-free sourcing. CMRT 3.0 in 2014 included a number of updates from the previous version, such as harmonization with the corresponding IPC standard while CMRT 4.0 in 2015 included an updated Standard Smelter List and numerous translation improvements, among others. The CFSI also launched the new CMRT Completion Guide, a comprehensive, step-by-step guide to filling out the CMRT. The CFSI also continued to support emerging programs in the conflict minerals space by joining the Advisory Committee of the Better Sourcing Program (BSP), supporting the Chinese Due Diligence Guidelines for Responsible Mineral Supply Chains developed by the China Chamber of Commerce of Metals, Minerals & Chemicals Importers & Exporters (CCCMC), and engaging the ICGLR Audit Committee on core training topics and decision-making processes. The CFSI now has over 320 members that utilize and support the further development of our tools, resources, and programs, including the Conflict-Free Smelter Program (CFSP). The CFSP has had great success. As of the beginning of 2016, 79 percent of identified smelters for all four metals – tin, tantalum, tungsten and gold (3TG) – are participating in the CFSP. In terms of global metal supply processed by CFSP-compliant smelters, a rough estimate for tin is currently around 80-90 percent of global production while tantalum coverage is estimated at greater than 95 percent.

• Improved research and engagement with smelters, which led to program growth • Launched multiple training modules in the new, publicly available CFSI eLearning Academy • Launched a risk-based audit program to reduce audit frequency for inherently low-risk smelters • Direct, bilateral, and multilateral engagement with the European Commission, European Council, and European Parliament to ensure consistency with proposed legislation • Continued regular bilateral engagement with critical industry partners, including ITRI/iTSCi, LBMA, RJC, TIC and TI-CMC • Conducted numerous member surveys on various aspects of due diligence and peer-reviewed company Conflict Mineral Reports (CMRs) • Supported development of written testimony to the U.S. House of Representatives Financial Services Committee • Hosted a meeting on EU legislation in Brussels with speakers from the EU Parliament, Council and Commission • Co-hosted joint auditor training with iTSCi • Engaged in multi-stakeholder dialogue hosted by CFSI, RSN and OECD • Spoke at numerous public forums, including meetings hosted by AIA, AIAG, TIC (in Malaysia), and OECD (in France), an OECD/CCCMC workshop in China, and an ICDX conference in Indonesia

Key CFSI accomplishments in 2015 include: • Developed and launched a new Smelter Database to capture the results of the organization’s extensive smelter identification and outreach activities

Staff at CFSI 2015 annual meeting in San Jose, California

25


26

/ EICC ANNUAL REPORT 2014-2015


EICC members directly employ more than 6 million people. More than 3.5 million people from over 120 countries contribute to the manufacture of EICC members’ products.

27


INCREASING FOCUS ON ENVIRONMENTAL ISSUES Environmental sustainability is one of the five pillars of EICC’s Code of Conduct, and is a core component of most EICC members’ sustainability programs. Environmental sustainability touches on impacts as local as worker health and safety, and as broad as global climate change. As part of the EICC Environmental Sustainability Work Group (ESWG) 2014 wrap-up, the ESWG completed an in-workgroup sensing exercise to help set priorities for 2015 and identified the following top issues: chemical management, energy consumption and greenhouse gas (GHG) emissions, and water. The group also identified some key strategies to drive awareness and performance improvement in these areas: • Identify, publicize, and drive best practices across member and supplier facilities • Develop a stronger, broader supply chain mapping, baselining, and benchmarking to identify priorities, improve performance, and incent participation • Leverage partnerships with other specialized groups, e.g., NGOs or other industry groups, to drive performance improvement

program. It was an opportunity for EICC members to pilot a GHG initiative that can help them measure and look for ways to reduce emissions, while enabling the EICC to drive GHG reporting further down into the supply chain. Additionally, it was harmonized with the EICC-ON Environmental Reporting Module so that the data collected in either platform would be easily comparable. More than 150 companies reported their GHG emissions for the very first time thanks to this EICC-CDP partnership. Altogether, we collected data from 462 companies to supplement the public reports available from over 1,600 companies in the electronics supply chain. That’s more than 2,000 total GHG emissions reports from which we plan to publish joint reports on industry trends in GHG reporting and help EICC members develop product supply chain GHG inventories. We plan to focus on exploring the different types of manufacturing in the supply chain across different geographies to identify the most carbon-intensive “hot-spots.” This will allow us to prioritize and implement GHG emission mitigation plans individually and collaboratively to drive reductions in our industry.

REDUCING EMISSIONS In 2014 the EICC, in conjunction with several member companies and MIT, published a report on Standardizing Methods for Performing Allocation of Supplier Carbon Data for IT Products. The goal of the project was to develop product-specific allocation methods that link facility-wide environmental data to the specific product types being made within that facility, thus improving our ability to accurately assess the impacts of our products. This study is widely referenced in the electronics industry today. In 2015 the EICC became the first industry association to partner with CDP, to encourage electronics companies to disclose through CDP’s supply chain

28

/ EICC ANNUAL REPORT 2014-2015

In the first year of the EICC-CDP partnership we achieved GHG reductions of 5.5 million tons of CO2e, equivalent to emission reduction savings of over

$236 million.


Moreover, in this first year we achieved GHG reductions of 5.5 million tons of CO2e, equivalent to emission reduction savings of over $236 million. The EICC also launched a research project in 2015 to measure fluorinated gases (F-GHGs), a powerful type of greenhouse gas used during electronics manufacturing in the supply chain. We conducted what we believe is a first-of-its-kind survey among approximately 90 percent of the marketplace for display panel manufacturers in our members’ shared supply chain. These companies make panels for TVs, phones, cameras, notebooks, tablets, automotive and aerospace vehicles, medical devices, and some industrial displays. We collaborated with the U.S. Environmental Protection Agency’s Energy Star program to help develop and distribute the survey, earning the EICC a nomination for the EPA’s Climate Leadership Awards. The results of the study will be published in 2016.

CHEMICAL MANAGEMENT Protecting workers and communities from exposure to hazardous chemicals has been a core component of EICC’s Code of Conduct and audit program since its inception. Through the efforts of EICC and its member companies, the electronics industry has developed engineering controls, worker health and safety training, and rigorous facility audit programs.

The EICC formed a Chemical Management taskforce in 2014 to develop a process to improve the identification, tracking and management of harmful chemicals in the electronics supply chain. In 2015 the taskforce published a position paper, Protecting Workers from Hazardous Chemical Exposure in the Electronics Supply Chain, to serve as a guiding document. The taskforce also conducted a gap analysis between the EICC Code of Conduct and the “chemical challenge” posed by some civil society groups and engaged those groups on behalf of members to address identified gaps. The best way to protect workers and the environment from chemical exposure is to ensure that workers know what they are using and how to use it safely. That is why we strengthened chemical management in VAP auditor training and made it a point of emphasis during audits over the past year. We also added a number of different training courses to help workers identify and manage the substances they use. These courses include:

• • • • • • • •

Chemical hazards identification Chemical hazard information Chemical receiving and unloading Chemical storage Chemical transport within plant Chemical use and dispensing Chemical disposal Emergency response

The combination of stronger auditing practices and training support for workers will lead to safer, healthier, and more efficient workplaces.

29


TACKLING INDIRECT SPEND The electronics industry has a supply chain that stretches well beyond the manufacturing of its products. These “indirect spend” suppliers perform services associated with our products that range from call-center to tech-support to e-waste management, and services associated with our facilities including construction and property management. The companies that manage these services often have less experience and literacy with CSR issues, and less capacity to address these issues in their workforce and operations. In addition, many EICC members share these indirect suppliers in high-risk countries around the world.

The EICC created a taskforce in 2014 to evaluate the risks in the indirect supply chain, and to come up with a strategy to address these risks. The taskforce completed an initial mapping of the shared indirect supply chain of 11 companies, identified a global supplier advisory council to work with on social and environmental compliance, and shared members’ current strategies for assessing and managing risk in their indirect supply chains. In 2015 the taskforce launched a dynamic indirect spend risk assessment tool and a program to apply sustainability ratings for indirect procurement. The tool focuses on call centers, branded merchandise, and facilities management. The EICC plans to integrate these resources into the broader VAP assessment process.

ASSESSING PRIORITIES AND SENSING EMERGING RISKS In 2014 and 2015 we engaged BSR to help conduct the EICC’s annual “sensing” exercise for the purposes of: prioritizing current social, environmental and ethical issues most significant to EICC members and key stakeholders; and sensing new and emerging issues that are growing in importance to the global electronics supply chain. While not a precise science, the sensing exercise provides a relative ranking of issues that helps establish direction for prioritization. This annual study is one of several inputs that complement our ongoing efforts to help inform strategic planning and workgroup and taskforce activities. Other inputs for those ongoing efforts include direct stakeholder engagement, member feedback, research, and proposed or pending regulations.

30

/ EICC ANNUAL REPORT 2014-2015

In 2015 we built upon the sensing survey instrument that had been first used in the prior year and assessed 30 specific issues across the four broader categories of labor and human rights, health and safety, governance and ethics, and environmental issues. Key data inputs for this exercise included EICC member survey results, VAP findings, external stakeholder survey results, news media mentions, and a qualitative assessment of issue impact. These data were weighted and mapped to a sensing grid that represented issues important to EICC members specifically and issues important to supply chain sustainability generally. While all of these issues are important, we consider those in the upper-right quadrant to be the top-tier group as they represent issues that are most significant for everyone, not just members or just stakeholders, for example.


IMPORTANCE TO SUPPLY CHAIN SUSTAINABILITY

EICC 2015 SENSING ASSESSMENT MAP

IMPORTANCE TO EICC MEMBER COMPANIES

EICC 2014 SENSING ASSESSMENT MAP Low (< 40.0)

Nondiscrimination & Humane Treatment Social Dialogue, Grievance Mechanisms, & Remediation

• • • • • • • •

• • • • • • •

• • • • •

Privacy & Data Protection Environmental Accidents, Grievances, & Remediation Access to Essential Goods & Services Biodiversity Impacts Respect for Property Rights Fuel, Logistics, & Transportation Environmental Impact Assessment

• • •

Stakeholder Engagement Community Involvement & Development Diversity, Inclusion, & Equal Opportunity Fair Wages Effluents, Pollution, & Waste Management Safe Use of Process Chemicals Anti-corruption

Compliance & Audits Energy Management & Systems Procurement Policies & Practices

• • • •

Health & Safety Forced Labor & Human Trafficking Fair Recruitment, Temporary, & Student Labor Working Hours, Holidays, & Leave Human Rights Due Dilligence & Impact Assessment

Employee Benefits & Social Security Water Resources Management & Sanitation

Disaster Risk Reduction & Emergency Preparedness

Low (< 40.0)

Climate Change Freedom of Association Transparency, Reporting, & Accountability Conflict Minerals Material & Resource Use Optimization Child Labor Business Ethics & Fair Behavior Training, Career Advancement, & Capacity Building

Medium (40.0-60.0)

High (> 60.0)

High (> 60.0)

IMPORTANCE TO SUPPLY CHAIN SUSTAINABILITY

Medium (40.0-60.0)

IMPORTANCE TO EICC MEMBER COMPANIES

Because the sensing instrument changed in 2015 it is difficult to draw direct comparisons between the 2015 and 2014 sensing assessment results. However, we can see some commonalities in the Top 5 issues for each year: both contained issues related to forced labor and human trafficking, health and safety, and working hours. 31


FY 2015 FINANCIAL HIGHLIGHTS FY 2015 OPERATING REVENUE

FY 2015 OPERATING EXPENSES

$9,733,245

$8,850,544 3%

1%

EVENTS

EVENTS

13%

23% CFSI

PROGRAMS

44%

MEMBERSHIP DUES

33%

VAP AUDITS

26%

ADMINISTRATIVE

23% CFSI

36%

VAP AUDITS

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

32

/ EICC ANNUAL REPORT 2014-2015


SENIOR LEADERSHIP, BOARD AND STAFF BOARD OF DIRECTORS 2014

BOARD OF DIRECTORS 2015

Tim Mohin

Kathleen A. Shaver

EICC Board Chair, and Director, Corporate Responsibility, AMD

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

Kathleen A. Shaver

Bruce Klafter

Bruce Klafter

Kevin Caffey

John Gabriel

Tim Mohin

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

EICC Board Treasurer, and Senior Director, Corporate Social & Environmental Responsibility, Flextronics

EICC Board Past Chair, and Global Supply Manager of Supply Chain Social Responsibility, IBM

EICC Board Vice Chair, and Vice President, Corporate Social & Environmental Responsibility, Flex

EICC Board Treasurer, and Vice President, Quality and Reliability, Qualcomm

EICC Board Past Chair, and Director, Corporate Responsibility, AMD

Deborah Albers

Marco Baren

Kevin Caffey

Andrew E. Cuthbert

Andrew E. Cuthbert

Tonie Hansen

Principal Social Strategist, Dell

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

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

Director, Global Citizenship, Nvidia

Tonie Hansen

Mike McDonnell

Hamlin Metzger

Hamlin Metzger

Bob Mitchell

Bob Mitchell

Melinda Painter

Kathrin Winkler

Director, Global Citizenship, Nvidia

Director, Corporate Responsibility & Sustainability, Best Buy

Global Manager, Supply Chain Responsibility, HP

Director, Supply Chain Social Responsibility, BlackBerry

Manager, Supply Chain ESG, Intel

Director, Corporate Responsibility & Sustainability, Best Buy

Global Manager, Supply Chain Responsibility, HP

Chief Sustainability Officer, EMC

Judy Wente

Director, Environmental Social Governance, Intel

33


BOARD OF DIRECTORS 2016

EICC STAFF 2016

Kathleen A. Shaver

Rob Lederer

Bob Mitchell

Tara Holeman

EICC Board Chair, and Director, Supply Chain Value Protection, Cisco

EICC Board Vice Chair, and Director, Global Social & Environmental Responsibility, Hewlett Packard Enterprise

Todd Melendy

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

Carolyn Duran

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

Marco Baren

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

Executive Director

Vice President of Program Management and Quality

Deborah Albers

Vice President of Social and Environmental Sustainability

Christine Briscoe

Vice President of Member Services and Human Resources

Michael Rohwer

Senior Program Director

Kevin Caffey

Chee Keong Lai

Andrew E. Cuthbert

Leah Butler

Vice President, Quality and Reliability, Qualcomm

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

Senior Director of Risk Assessments and Audits

CFSI Program Director

Harinder Jeet Kaur

Jarrett Bens

Hamlin Metzger

Carlos Busquets

Paula Pyers

Kenneth Anderson

Kathrin Winkler

Hillary Amster

Global Social Responsibility Director, Molex

Director, Corporate Responsibility & Sustainability, Best Buy

Senior Director, Supplier Responsibility, Apple Inc.

Chief Sustainability Officer, EMC

Director of Communications

Director of Public Policy

Director of Information Technology

CFSI Audit Program Manager

Valerie Esty

Meetings and Member Services Manager

Marianna Smirnova CFSI Project Manager

Ross Landis

Database Project Manager

Gavin Wu

CFSI Program Associate

Steve Moloney

Chief Financial Officer

Chuck Williams Accounting Manager

34

/ EICC ANNUAL REPORT 2014-2015


EICC MEMBERS AS OF MARCH 2016 AMERICAS

EMEA

ASIA

Advanced Micro Devices

Lexmark

ASML Holding

AcBel Polytech Inc.

Amazon.com Inc.

Logitech Inc.

Edwards Ltd

Acer Inc.

Amkor Technology, Inc.

Marvell Technology Group Ltd

NXP

Advanced Semiconductor Engineering, Inc.

Analog Devices, Inc.

Micron Technology, Inc.

PCH International

ASUSTeK Computer Inc.

Apple, Inc

Microsoft

Philips

Chicony Electronics Co., Ltd

Applied Materials

ModusLink

STMicroelectronics N.V. International

Compal Electronics, Inc.

Arista Networks, Inc.

Molex Incorporated

Technicolor SA

FCI

ARRIS

Motorola Solutions

TomTom International BV

Foxconn

Avaya Inc.

NetApp

TT Electronics Plc

HTC Corp.

Best Buy

Netgear

Konica Minolta, Inc.

BlackBerry Corporation

Nu Mark

KYE Systems Corp.

Broadcom Corp.

Nvidia Corporation

Lenovo

Brocade Communications Systems, Inc.

ON Semiconductor

LG Electronics

Oracle America, Inc.

Longwell Company

Plexus Corp.

New Kinpo Group

Qorvo

Pegatron

Qualcomm

Powertech Technology Inc.

SanDisk Corporation

Quanta Computer Inc.

Sanmina-SCI

Samsung Electronics

Seagate Technology

Senju Metal Industry Co., Ltd.

Semtech Corporation

SK Hynix Inc. - Icheon

Sierra Wireless, Inc.

Sony Corporation

Skyworks Solutions, Inc.

Taiwan Chinsan Electronics Industrial Co., Ltd.

Flex

SMART Modular Technologies, Inc.

Taiwan Semiconductor Manufacturing Company, Ltd. (TSMC)

Ford Motor Company

SunEdison, Inc.

Tokyo Electron Limited

Freescale Semiconductor

Symantec

Toshiba Corp.

Genband US LLC

Syncreon

Wistron Corp.

HP Inc.

Texas Instruments

XP Power LLC

HPE

Veritas

IBM Corporation

Vishay Intertechnology

Infineon

Western Digital

Intel Corporation

Xerox

Isola Group

Zebra Technologies

Jabil

Corporation

Celestica Ciara Technologies Ciena Limited Cisco Systems Inc. Citrix Systems Dell Inc. Eastman Kodak Company EMC Corporation Fabrinet Fairchild Semiconductor

Juniper Networks KLA Tencor

35


www.eiccoalition.org


EICC Annual Report: 2014-2015