RBA COMPASS AWARDS 2018
CASE STUDIES
ON LEADERSHIP, INNOVATION AND IMPLEMENTATION
TABLE OF CONTENTS INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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Intel – Eliminating Forced Labor in the Information and Communication Technology Supply Chain. . . . 2
Flex – Sinctronics: Circular Economy Efforts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Intel – Look Inside: In pursuit of Conflict-Free . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Microsoft – Embedding Responsible Sourcing Principles into Business and Culture . . . . . . . . . . . . . . 6
ATEA-ASF Accelerating Sustainability Through Effective Market Demands. . . . . . . . . . . . . . . . . . . . . . . . 8
INNOVATION
Dell – Innovatively Creating Value from Waste Using Sustainable Materials. . . . . . . . . . . . . . . . . . . . . 10
Philips – Supplier Sustainability Performance - Beyond Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ASUS – Environmental Profit and Loss for Laptops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
AMD – AMD’s 25x20 Energy Efficiency Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Lenovo – Lenovo’s Low-Temperature Solder Cuts Greenhouse Gas Emissions. . . . . . . . . . . . . . . . . . . 18
IMPLEMENTATION
Jabil – The Jabil Family Looks After Your Family. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Dell – Worker Health and Safety Training Using Mobile Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
HP – Women in Factories Leadership Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Jabil – Equality and Inclusion for People with Physical Challenges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
STMicroelectronics – Eradicating Recruitment Fees for Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
INTRODUCTION The Responsible Business Alliance (RBA) launched the Compass Awards for members, their suppliers and factories in June 2018. Its primary objective is to recognize and encourage efforts that lead to meaningful, positive change in line with the RBA’s vision and mission. The awards program celebrates corporate social responsibility excellence across three categories: Leadership, Innovation, and Implementation. Many of the award submissions will also serve as examples of successful actions that other companies can emulate. In the Leadership category, RBA members must demonstrate a high-level commitment to corporate social responsibility (CSR), embedding it as a core business practice and supporting it with a large investment in time, money or other resources. The Innovation category requires members, with or without partners, to show a highly effective program that represents an innovative solution to a CSR challenge. The Implementation category is open to any factory, member or supplier facility that can demonstrate an impressive application of CSR at the site level that is well-documented and repeatable by other sites.
The Compass Awards recognize and encourage efforts that lead to meaningful, positive change in line with the RBA’s vision and mission. We received 55 entries, nearly 20 in each category, which were reviewed and scored by an independent panel of judges from intergovernmental organizations and civil society. The finalists and winners of the inaugural RBA Compass Awards, highlighted herein, were announced during a ceremony at the Responsible Business 2018 annual conference in Santa Clara, California. For information on the 2019 Compass Awards, please contact awards@responsiblebusiness.org and visit this page on the RBA website: responsiblebusiness.org/compass-awards
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ELIMINATING FORCED LABOR IN THE INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) SUPPLY CHAIN By helping suppliers map and risk assess their own labor supply chains and those of their major suppliers who have foreign or migrant workers, Intel is driving responsibility further into the supply chain. In late 2013, news of forced and bonded labor in electronics supply chains was circulating. In some regions, workers paid numerous fees to labor recruiters, agents and brokers to get and keep their job. Some workers experienced contract substitution, and/or receiving lower pay and benefits than promised. Passports were often confiscated, and promised living accommodations did not always meet basic international standards. Concerned that forced or bonded labor could exist in its supply chain, Intel met with non-governmental organizations (NGOs) and other third parties to better understand the issue: why it happens, how better to detect it, and how to combat it when it is uncovered. With a goal to prevent human rights violations, Intel garnered executive commitments and created a program to uncover and combat forced and bonded labor.
APPROACH AND SOLUTION IAs one of the early ICT companies focused on this issue, Intel set a high bar for itself and suppliers. Intel commenced with supply chain audits in early 2014, starting in Malaysia and expanding to Singapore, Thailand, Hong Kong, Taiwan, China and
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Japan. As it found risks of forced and bonded labor it moved quickly to have passports returned, fees repaid, contracts corrected and living condition gaps addressed. The company set out to establish a best practices approach to influence other companies to adopt the same diligence against human rights violations within the supply chain. Intel’s efforts expanded to address the root causes of forced and bonded labor, looking beyond parts and materials suppliers to indirect suppliers that have shown to have a higher level of risk. By helping suppliers map and risk assess their own labor supply chains and those of their major suppliers who have foreign or migrant workers, Intel is driving responsibility further into the supply chain.Intel worked with the industry to influence changes to the RBA Code of Conduct; getting to a “no-fees” approach. It also helped strengthen audit tools to identify forced and bonded labor, and drove the creation of a fees definition.
KEY OUTCOMES Since 2014, more than 12,600 workers have seen over $14M in fees returned by suppliers and agents, and over 35,000 workers in Intel’s supply chain have been positively impacted. Recent audits show a decrease in issues as a result of its efforts. These efforts benefit the business as well: changes are creating a more productive workforce that is producing higher-quality products. Human Resources directors are able to attract more and better qualified candidates due to the “no fees” position, and retention rates are increasing.
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SINCTRONICS: CIRCULAR ECONOMY EFFORTS The modern world has a growing reliance on electronics. Electronic devices keep us connected while on the go but, when they break or become obsolete, too often they end up in the trash. Electronic waste (e-waste) is a challenge not only because of the volume of material that is being discarded, but also because some components can cause environmental issues. During 2014 alone, nearly 42 million tons of e-waste was created worldwide. Industry and consumers are recognizing that past recycling practices, such as sending devices to developing countries for disassembly and disposal, can be replaced with something better. Flex and a client realized that the region around São Paulo, Brazil, where manufacturing and re-manufacturing sites are close together, could showcase the true potential of a circular economy where the companies would collect materials to be refurbished or re-manufactured and reduce e-waste and improve sustainability outcomes. That’s when Sinctronics was founded.
APPROACH AND SOLUTION Founded by Flex, Sinctronics Green IT Innovation Center is a Brazilian initiative focused in the electro-electronics sector that provides solutions to reduce environmental impact of post-industrial and post-consumer waste while generating more wealth and jobs. Combining innovation and R&D, Sinctronics provides technology and infrastructure to develop projects transforming solid waste into new products within the customer’s supply chain, contributing to the development of more sustainable business models and alleviating extraction demands on the planet.
receive the non-plastics materials and giving them the best destination in accordance with the circular economy, tracking all the equipment and service levels involved.
KEY OUTCOMES Beyond recycling, Sinctronics helps Flex to extract raw materials from obsolete products, and transform them into new parts with the same quality as the original ones. Flex developed the capacity to understand what each part of an electronic device is made of, so that it can make new parts with the same bases and prescriptions. Through the implementation of a zero-waste project for post-industrial residues at Flex manufacturing sites in Brazil, Sinctronics guarantees that no material from the direct production process is destined for the landfill, improving Brazil’s manufacturing image globally and certifying as Zero Waste with a competent organization. For some kinds of plastic, the process of getting raw material from old products saves up to 83 percent of energy and up to 75 percent of CO2 emissions when compared with typical extraction production. On average, Sinctronics’ customers have replaced 20 percent of the virgin plastic they use with recycled materials. Sinctronics has reduced client costs by up to 30 percent and increased material collection times by 50 percent. With Sinctronics, Flex deployed a whole new business, creating wealth and employment for the region. Along with more jobs in a new market, Sinctronics drives specialization and training programs to fulfill the needs of this new business.
Sinctronics developed a complete reverse cycle ecosystem built on four pillars: reverse logistics, recycling facilities, research and development, and reverse supply chains. The company identified and developed partners for doing reverse logistics in an optimized way, ensuring the right organizations
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For some kinds of plastic, the process of getting raw material from old products saves up to 83 percent of energy and up to 75 percent of CO2 emissions when compared with typical extraction production.
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LOOK INSIDE: IN PURSUIT OF CONFLICT-FREE Minerals from the Democratic Republic of the Congo (DRC) and adjoining countries are sometimes mined and sold under the control of armed groups to finance conflict and violence. Some of these “conflict minerals” can make their way into the supply chains of industrial and consumer products, including those in the electronics industry. Intel acquires and uses minerals from sources worldwide, and wants the products it purchases from suppliers to be “conflict-free.” It was one of the first companies to address the issue of conflict minerals in its supply chain, and has worked diligently on systems and processes to enable it to reasonably conclude that the tantalum, tin, tungsten and gold (3TG) in its products do not finance or benefit armed groups in the region while continuing to support legitimate mineral sourcing.
APPROACH AND SOLUTION The Intel Conflict Minerals Program was born after the company was made aware that minerals used in its products were mined in areas of armed conflict in the DRC. Intel enrolled in a quest to map out its supply chain and understand how these minerals were reaching its products, in order to find responsible alternatives without placing a defacto embargo in the region. The company’s goal was to continue sourcing from the DRC, but to cut off profit to the conflict-affected mines. After conducting a survey in 2009 where Intel asked its suppliers to identify the origin of 3TG minerals used in the products and components supplied to Intel, the company determined that the most effective and efficient method for reducing the potential for conflict minerals to enter its supply chain was to focus on the smelter and refiner facilities where the ore is processed.
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KEY OUTCOMES Intel conducted its first conflict minerals supply chain survey in 2009 and has since visited 109 smelter and refiner facilities in 23 countries to provide education on conflict minerals and to collect country of origin information of the conflict minerals in the supply chain. It established and co-chaired the EICC and GeSI Extractives Working Group through 2013, leading to the creation of the Conflict-Free Sourcing Initiative (CFSI), now the Responsible Minerals Initiative (RMI). Intel and other industry partners developed a smelter and refiner validation process, called the ConflictFree Smelter Program (CFSP), now the Responsible Minerals Assurance Process (RMAP). RMAP audits are ongoing, and new smelters and refiners are regularly added to the public list of conformant smelter and refiner facilities. This process is instrumental in helping others achieve their goal of obtaining 3TG from conflict-free sources. Since 2013, Intel has manufactured microprocessors with 3TG sourced from conflict-free supply chains. Since 2014, it has obtained an IPSA of applicable sections of its conflict minerals SEC filing, concluding the design of its conflict minerals program is in conformity with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Intel was the first electronics company to publish goals related to manufacturing products from conflictfree sources, and met its published goals to manufacture microprocessors with tantalum sourced from conflict-free supply chains in 2012. In January 2014, Intel accomplished its goal to manufacture microprocessors that are conflict-free for 3TG minerals. Thus far, approximately 99 percent of the smelters
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and refiners in its supply chain are either conformant to a responsible mineral sourcing validation program, have begun participating in such a program, or are facilities that, based on Intel’s due diligence activities, do not process conflict minerals that originated through conflict zones. Intel’s ultimate goal is to continue to work to make it harder for armed groups to profit from the trade of 3TG. By working with industry associations to continue to onboard smelters and refiners into third-party audit participation and to raise awareness of the issues, Intel will continue to successfully affect change.
In January 2014, Intel accomplished its goal to manufacture microprocessors that are conflict-free for tantalum, tin, tungsten and gold.
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EMBEDDING RESPONSIBLE SOURCING PRINCIPLES INTO BUSINESS AND CULTURE Responsible sourcing is integral to Microsoft’s mission to empower every person and organization on the planet to achieve more, and a strategy for business growth as Microsoft lowers the cost of its devices and increases customer satisfaction. Key decision makers at Microsoft Devices set out to consider sourcing impacts on factory environments, worker health and safety, labor, and human rights, along with variables such as technology, quality, on-time delivery, and cost. The team found that sourcing data was unorganized, mainly qualitative, often inaccessible and/or untimely. Furthermore, Microsoft decision makers could not use existing data to determine whether choices would positively or negatively impact workers and surrounding communities. Recognizing that sourcing data was incomplete and not organized in a way that empowered the company to make strategic decisions to benefit workers, surrounding communities and the business, Microsoft embarked on a mission to ensure responsible sourcing is embedded in its core business functions.
APPROACH AND SOLUTION The Microsoft Responsible Sourcing Team, with executive support, seized the opportunity to increase the transparency and business value of sustainability data for decision makers. Efforts required cross collaboration, coordination, and continued innovation across Microsoft with input from stakeholders such as customers, investors, policymakers, and non-governmental organizations (NGOs). To ensure responsible sourcing is considered in decision-making and to create a sustainability culture
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across the business unit, Microsoft Devices invested heavily in digital technology, and executives championed new governance structures, processes and metrics. The Microsoft Responsible Sourcing Team followed a four-step iterative approach in line with its ISO 9001/14001 certifications: the PDCA (Plan, Do, Check, Act): Plan: Established a governance structure defining stakeholders, their responsibilities and accountabilities. An improvement committee then worked to implement the strategy, with a working group of “Champions” focused on building a responsible sourcing culture in each sourcing team. Do: Implemented a supplier lifecycle management program that includes annual risk assessments and audits of all directly contracted suppliers to increase supply chain sustainability and ensure factory workers who make its devices are treated with equity and dignity. The program applies a corrective action system to address non-conformances.
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Check: Continuous monitoring is essential to program efficacy. The program undergoes internal audits as well as third-party evaluations to continuously seek opportunities for improvement and to leverage tools for program enhancement and refinement.
sustainability-related decisions. Interacting with partners through Microsoft’s technology platforms also builds cross-team trust and a shared understanding of information.
Act: To build responsible sourcing into the Microsoft culture, the team developed a robust system that outlives the current team and adapts to changes in scale, emerging challenges, and complexity. Employees who have improved the program are recognized.
KEY OUTCOMES
The Responsible Sourcing Team used a flexible digital platform technology and new processes to build
Microsoft exercises a growth mindset about embedding the responsible sourcing principles into its core processes and ensuring that responsible sourcing is part of the Microsoft work culture. foundational systems to ensure accountability and efficiencies in Microsoft’s programs. Investments in technology solutions such as the Audit Management System, SEA Academy, and customized dashboards enable strategies, process efficiencies, and insights to meet its sustainability objectives. These solutions empower business decision makers to consume real-time information and make optimal
Microsoft exercises a growth mindset about embedding responsible sourcing principles into its core processes and ensuring that responsible sourcing is part of its work culture. Impact can be achieved when there is a commitment from all levels of leadership and employees, transparent and enhanced analytics to drive better decisions, and strong management systems. Microsoft is committed to sharing these learnings with its value chain stakeholders and peers in different industry sectors. Quantifiable metrics indicate consecutive quarterly improvement within Microsoft’s supply chain. Fiftythree factories achieved the self-management stage in FY18, with 18 of those moving up from the compliance stage. The average stage level improved over five consecutive quarters, indicating that the overall SEA capabilities within Microsoft’s supply chain continue to mature. The average maturity stage for new suppliers improved in four of the last five quarters. Improvements are attributed to expanded audits and improved screening criteria. On average, 7 percent are in the compliance watch list every quarter. Some are new, while others continue to have challenges. Suppliers unwilling to improve are recommended for phase-out and risk termination of their business with Microsoft.
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ASF: ACCELERATING SUSTAINABILITY THROUGH EFFECTIVE MARKET DEMANDS The last 5-8 years have seen an exponential increase in sustainability demands within public and private procurement. As organizations in the IT sector continue to prioritize sustainability, demands on suppliers are growing. Despite best intentions on the part of the industry, sustainability requirements are broad, lack consistency and frequently increase compliance costs for resellers, brands and their suppliers. A leader in sustainability in the IT industry, Atea was concerned about the growing gap between customer demands and the ability of the industry to deliver on them at all levels in the supply chain.
Atea wanted to spearhead acceleration in the IT sustainability journey by improving the focus, quality and precision of customer demands, balancing customers’ ambitions and industry possibilities. With approximately 80 percent of current procurements conditional on some form of sustainability, Atea found many sustainability demands to be aspirational in nature and often dictated by political imperative. In addition, the requirements demonstrated a lack of understanding of the complexity of the supply chain and of the maturity and commitment
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to sustainability deep down in the supply chain. Demands were not only increasing costs, but also wasting resources that could be spent on advancing comprehensive and attainable sustainability outcomes that would benefit people and the planet. Taking responsibility for its size and position in the Nordic market and its strong partnerships with leading IT brands, Atea wanted to spearhead acceleration in the IT sustainability journey by improving the focus, quality and precision of customer demands, balancing customers’ ambitions and industry possibilities.
APPROACH AND SOLUTION As a leading value added reseller (VAR) in the Nordic market, Atea set out to alleviate the confusion in the region by creating a program that would help the industry prioritize its sustainability efforts. This program would improve the focus, quality and precision of customer demands, balancing customer ambition and industry possibilities and thus creating effective incremental change. Atea established Atea Sustainability Focus (ASF), a platform through which the Nordic market identifies the single most urgent priority for the IT industry to address and provides concrete recommendations to the industry. ASF facilitates a more structured dialogue between the IT industry and the largest public and private buyers of IT to identify urgent priorities, provide concrete recommendations from
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regional sustainability experts, and ultimately to address what is achievable and realistic around sustainability. Through an annual online survey (ASF Customer Dialogue) and an annual conference (ASF Forum), Atea gathers the views of some 500 IT decision makers, procurers and sustainability specialists. The results are analyzed by a third party and discussed by the ASF Advisory Board, a group of IT and sustainability leaders, to define priority areas of sustainability focus and a clear set of recommendations for the Responsible Business Alliance (RBA) to advance. ASF Report 2018 was delivered to the RBA in January 2018 and discussed at the RBA Leadership Circle, where it generated a constructive discussion.
KEY OUTCOMES IT decision makers and sustainability experts from leading Nordic companies joined the ASF Advisory Board, including leaders from H&M, Ikea, Malmö city council, LKAB, Ørsted Energy, United Paper Mills (UPM), DNB group and the Swedish National Procurement Authority.
In July 2017, in partnership with Dell EMC, the first ASF Forum brought together 250 participants over two days for keynotes, panels and workshops focused on the IT industry’s contribution to sustainable development goals. With insights from the ASF Forum and the ASF Customer Dialogue survey, Atea released ASF Report 2018. This report promoted a key recommendation: to establish a common reporting framework for all members to identify the most material sustainability issues facing the industry. The recommendation that RBA and member companies deepen their transparency efforts and develop a common reporting framework around core material issues for the industry was welcomed by the industry and generated a constructive debate around implementation. ASF is facilitating a discussion between IT buyers and RBA members around the concrete and meaningful demands that can be placed on the industry to advance measurable sustainability programs in an efficient and focused way. The core measure of the success of the program is RBA’s commitment to advancing standards in reporting and transparency and empowering partners and customers to move this sustainability agenda forward.
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INNOVATION
INNOVATIVELY CREATING VALUE FROM WASTE USING SUSTAINABLE MATERIALS More than 8 million tons of plastic enter the ocean every year, a number that will likely double by 2025. It is expected that more plastic than fish will be in the ocean by 2025 if things don’t change. Additionally, 1.6 Earth’s worth of renewable resources are used each year, and 90 percent of raw materials used globally are not cycled back into the economy. To tackle this issue, Dell looked for innovative ways to increase efficiency and generate value from waste. The company launched its Legacy of Good initiative, a program that drives sustainability by keeping waste out of landfills and sets goals for sustainable materials in products and sustainably sourced packaging materials.
APPROACH AND SOLUTION Dell’s partnerships, supply chain expertise and Legacy of Good initiative put it in a unique position to advance a circular economy model and provide solutions that create value from waste or industrial byproducts. Dell has targeted five areas in particular: post-consumer plastics, closed-loop plastics, oceanbound plastics, pollution ink, and closed-loop gold. In 2008, Dell began purchasing post-consumer plastics and using them in its PCs, displays and servers. This matured into Dell’s closed-loop plastics program in 2014, when the company started recovering plastics through its partnership with Goodwill and using the collected resin in its supply chain. In spring 2018, Dell became the first PC manufacturer to use gold recovered in a closed-loop process from e-waste. The company collects gold from unwanted and used electronics through the Dell Reconnect
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program, a partnership with Goodwill Industries; businesses also participate through Dell Asset Resale & Recycling Services. Its supplier, Wistron GreenTech, created a new process to recover gold from these recycled electronics. Dell pioneered the use of ocean-bound plastics in its packaging by incorporating plastics collected from coastal areas. Dell co-founded NextWave, a cross-industry consortium creating the world’s first commercial-scale ocean-bound plastics supply chain. Dell and NextWave members anticipate diverting over 3 million pounds of plastics from the ocean within five years. Dell also began printing packaging with ink that combats air pollution in India. Pollution ink is made using carbon black refined from the particulate matter collected from the exhaust of diesel generators. Dell’s supplier, Chakr Innovation, developed a solution that collects particulate matter that is refined into carbon black. In this manner, not only is Dell sourcing the ink from a waste product, but it is also helping address air quality issues in heavily polluted Indian cities.
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KEY OUTCOMES The plastic Dell collects is incorporated into more than 125 Dell products and the program is now the world’s largest technology recycling program, with operations in 75 countries. Since 2012, Dell has recycled more than 73 million pounds of recycled materials into new products and is on track to reach its goal of recycling 100 million pounds of recycled content into its product portfolio by 2020. Dell is already achieving 95 percent of its commitment to ensure 100 percent of product packaging is sourced from sustainable materials by 2020. Between February 2012 and January 2018, Dell used more than 21.5 million pounds of closed-loop plastics to create new parts from old computers. This generated more than $1.8 million in cost savings and an 11 percent decrease in carbon footprint when compared with using virgin plastics. In spring 2018, Dell became the first mainstream business with a UL Environment-certified process for closing the loop on gold, recovering the metal from e-waste and using it in the production of new motherboards. The process its recycling partner uses to extract the gold has a 99 percent smaller environmental footprint than traditional gold mining, with the added benefit of clear traceability.
In December 2017, Dell began shipping 125,000 boxes from India overprinted using pollution ink created by capturing diesel exhaust. Based on the amount of air flowing through, Dell is helping clean the equivalent amount of air breathed annually by about 110,000 people.
Since 2012, Dell has recycled more than 73 million pounds of recycled materials into new products and is on track to reach its goal of recycling 100 million pounds of recycled content into its product portfolio by 2020. Dell has prevented 16,000 pounds of plastic from entering the ocean through its ocean-bound packaging initiative, and committed to preventing 160,000 pounds of plastic annually from entering the ocean by 2025. Furthermore, Dell and NextWave coalition members pledged to collectively divert more than 3 million pounds of plastics from entering the ocean within five years.
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SUPPLIER SUSTAINABILITY PERFORMANCE – BEYOND AUDITS Royal Philips started conducting supplier sustainability audits in 2004 as part of its commitment to be a responsible company. Supplier scoping was based on criteria such as risk countries and spend threshold (>EUR 1M). Since 2004, it conducted, through third-party service providers, approximately 2,500 sustainability audits. During the audit program, Philips identified industry-specific non-conformities re-occurring at a large number of its suppliers, e.g., related to health and safety or remuneration. Philips believed in the need for a structural change that goes beyond auditing. Consequently, it developed a new approach, titled “SSP” (Supplier Sustainability Performance). It focuses on collaboration, driving suppliers to meet agreed targets, and encouraging various stakeholders to join the approach. Managing improvements structurally over time requires a systemic approach, using a set of recognized and global references, a straightforward process, customized action plans, ambitious targets and a group of suppliers in scope.
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The overall goal was to embed a new SSP approach that ensures continual improvement in supplier sustainability based upon a joint commitment that extends beyond auditing compliance.
APPROACH AND SOLUTION When capacity-building programs showed limited positive impact in the number of non-conformities identified, Philips analyzed the audit program in greater depth using root-cause analysis. As part of its strategic and structural approach, Philips aimed to develop a future-proof supplier sustainability approach. Based on the root-cause analysis, Philips benchmarked existing sustainability audit and assessment schemes; reviewed existing services and solutions already available on the market; conducted a literature study, trend analysis and peer review; set up an intensive stakeholder dialogue with various stakeholders; and mapped the relevant standards and references meeting its and customers’ requirements.
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The Supplier Sustainability Performance program supported Philips in making its supply chain more sustainable, taking a systematic approach to improving sustainability performance, driving continuous improvement, and measuring impact in a structured way.
These results drove the development of the SSP, a structured and systematic approach that drives continuous improvement in different ways for suppliers. Philips expanded audits beyond risk countries to globally and increased the frequency of audits to annually – while keeping costs the same. For each supplier within the scope of the SSP, core elements are identified and measured in an annual cycle through a structural process based on four key stages: Select defines which suppliers are in scope and clarifies expectations to relevant stakeholders through an annual process covering BOM (Bill of Material) suppliers and IMS (Indirect Materials and Services) such as logistic service providers or human resource service providers. Identify invites suppliers in scope to complete a Self-Assessment Questionnaire (SAQ) and provide sufficient supporting evidence enabling subject matter experts to perform a validation based on predefined criteria. This validation results in clarification of supplier sustainability maturity over all core aspects and a draft SSIP (Supplier Sustainability Improvement Plan). Agree assigns the suppliers to different supplier status. The minimum requirement, a pre-requisite to be met by all potential and active suppliers in scope, is defined as PZT (Potential Zero Tolerance). The easiest to identify are suppliers that are BiC (Best in Class), who score highly after validation because they have integrated sustainability in their business and manage sustainability in a structural manner. Suppliers that are aware, capable, and above a certain maturity level are identified as DIY (Do It Yourself), and these suppliers are remotely guided and supported. The most promising and impactful group of suppliers is assigned to SSI (Supplier Sustainability Improvement). This group of suppliers is often unaware of sustainability requirements to improve their sustainability performance, and seems to be highly engaged and committed. Implement/Sustain is about the execution of the agreed SSIP. Suppliers allocate resources, maintain the improvement plan, track the progress of the plan, and measure how their actions are influencing the local situation through monthly KPIs against a predefined baseline.
KEY OUTCOMES The Supplier Sustainability Performance program supported Philips in making its supply chain more sustainable, taking a systematic approach to improving sustainability performance, driving continuous improvement, and measuring impact in a structured way. Goals are set as part of Philips’ sustainability 2020 program, “Healthy People Sustainable Planet,” and reported annually to its external stakeholders via its Annual Report. The 2020 target is to have 300 suppliers as part of the annual SSP approach. Internally, Philips secured integration of SSP in its procurement KPIs and embedding controls in its core procurement processes. A supplier sustainability dashboard is structurally distributed every month within the procurement department. In addition, Philips developed an app (U-Sustain), providing its procurement colleagues with 24x7 access to the status of their suppliers’ sustainability performance of all relevant programs. Engagement of all relevant stakeholders next to facilitation of a change management process makes the implementation of SSP successful. Each stakeholder has a different role in the change process, and measuring both progress and performance helps. Philips continuously identifies areas to further improve its process, tools, templates and support to ensure structural and long-term impact.
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INNOVATION
ENVIRONMENTAL PROFIT AND LOSS FOR LAPTOPS In recent years, the global sustainable development trend shows a growing number of investors are not only concerned about stable profitability of the business, but also want to understand the impact on society and the environment. Furthermore, they expect to have monetary valuation to evaluate the enterprise, comprehensively and objectively. In view of this, and understanding that the environmental impact caused by electronics is mainly from mining for raw materials and manufacturing, ASUSTeK Computer Inc. (ASUSTeK) initiated the Environmental Profit and Loss (EP&L) project, starting in 2017. EP&L measures the total cost and valuation on the environment, directly or indirectly, by ASUSTeK’s operations. The major difference between EP&L and a traditional environment report is that EP&L not only quantifies the environmental resources (such as water) or emissions (such as greenhouse gas emission) consumed by a company’s operating points and supply chains, but it also measures the influences of environmental impacts on human and social well-being and identifies the monetary values of these social influences, expressing all impacts in the same monetary unit.
APPROACH AND SOLUTION Using an established methodology and framework, ASUSTeK was the first technology company to establish EP&L, and set a benchmark to lead the industry in engaging in broader EP&L assessments. ASUSTeK conducted the EP&L analysis based on the methodology in PWC’s “Valuing Corporate Environmental Impacts,” and referred to the evaluating process of natural capital impacts posted by Natural Capital Coalition (NCC). This enabled the company to establish a language for effective communication between internal and external interested parties and created a vehicle for consistent evaluation. For the evaluation, four tiers of suppliers within the supply chain were identified and examined, including: ASUSTeK operations, OEM assembly, manufacturing of major components, and mining and manufacturing of raw materials. It was revealed that the environmental impact from the manufacturing process throughout the laptop supply chain was primarily
Laptop computers were chosen as the target. The results allowed different environmental impacts to be comparable, and provided critical references for decision makers in product development and supply chain management.
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Benefits of the EP&L analysis included establishing capacity for monetary valuation of environmental impact, understanding environmental externality of the supply chain from a macroscopic view, and identifying significant hot spots.
from components manufacturing and energy and resources usage in product assembly, which included electricity, water, wastewater and waste discharge. Therefore, the EP&L chose four environmental indicators for assessment: greenhouse gas emission, water consumption, solid waste, and water pollution.
KEY OUTCOMES Benefits of the EP&L analysis included establishing capacity for monetary valuation of environmental impact, understanding environmental externality of the supply chain from a macroscopic view, and identifying significant hot spots. According to the analysis, the impact of laptops from the supply chain in 2016 was approximately US $347 million. Water pollution had the largest impact among all environmental aspects, followed by greenhouse gas emission and water consumption. Environmental impact varied across the four tiers of suppliers in the supply chain. For example, greenhouse gas emissions were the largest environmental impact at ASUSTeK operations, accounting for more than half of the total, and were also the largest environmental impact at OEM assembly and manufacturing of major components, accounting for about 95 percent and 80 percent of the total, respectively.
In the mining and manufacturing of raw material tier, water pollution was the largest environmental impact, accounting for about 78 percent of the total. Through the analysis of the results of this project, ASUSTek enhanced its management of the supply chain. Specifically, the company formulated greenhouse gas reduction targets for ASUSTek and first-tier suppliers, and promoted renewable energy projects in the supply chain; formulated a third-order supplier wastewater pollution value compliance monitoring program; organized annual supplier conferences to share new knowledge on greenhouse gas reduction and wastewater management technologies to enhance supplier capabilities; and committed to perform annual on-site audits to confirm reduction, performance and compliance.
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INNOVATION
AMD’S 25X20 ENERGY EFFICIENCY INITIATIVE By 2020, it’s estimated there could be 50 billion Internet-connected devices. Because these consume electricity, their use contributes to GHG emissions, a leading cause of climate change. In the face of growing demand for computing, the environmental impacts are a significant challenge. To offset the environmental impacts of computing, AMD is at the forefront of devising technical solutions for improved computing performance and energy efficiency.
technical and strategic collaboration. The challenges are many. For example, computers rarely need to run at peak power, so AMD engineers designed algorithms to optimize for typical-use computing, conserving power during microseconds of idle activity. Constantly emphasizing more performance per watt motivates AMD engineers to create innovative solutions to benefit customers and the planet.
AMD launched its 25x20 Energy Efficiency Initiative in 2014, which voluntarily aims to increase the energy efficiency of its Accelerated Processing Unit (APU) processors 25 times by 2020 from a 2014 baseline. APUs are the core computing element in mobile devices, including laptops and notebooks.
With each new generation of AMD APUs, the company continues to boost the performance per watt needed to stay ahead of the trend line for the 25x20 goal. AMD’s progress in 2018 alone, in a single processor generation, puts the company up to 25 percent closer to achieving 25x20 due to new engineering enhancements and efficiencies. This includes improvements in every key metric in the 25x20 initiative: more compute performance, more graphics performance, lower power during heavy usage, and significantly lower power during light usage.
Driving toward 25x20 requires a total company effort, bringing together experts across departments for
Meeting the 25x20 target requires substantially increasing the pace of typical use energy efficiency
APPROACH AND SOLUTION
RELATIVE ENERGY EFFICIENCY
25x
(log scale)
25x20 Goal Energy Efficiency of AMD APUs
2014
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ADDITIONAL ENERGY EFFICIENCY BY 2020 (2014–2020)
2015
2016
2017
2018 “Raven Ridge”
2019
2020
For more information and substantiation please go to www.amd.com/25x20
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If all laptops projected to be in use in 2020 were to achieve AMD’s energy efficient goal, the energy savings could be more than 18.4 billion kwh, equivalent to power produced by 3,500 wind turbines or 3.3 coal-fired power plants.
gains by using new technologies and methods. AMD is focused on developing new processor architectures, power efficient technologies, and power management techniques to achieve the 25x20 goal: Processor Architecture: AMD made numerous improvements in processor architecture that enable all the computing elements that make up an APU – the central processing unit (CPU), graphics processor unit (GPU) and specialized accelerators – to share the same memory for better performance and efficiency. Power Efficient Technologies: AMD developed adaptive voltage and frequency scaling that dynamically adjusts processor behavior in real-time in response to numerous parameters to optimize its operation for maximum efficiency. Power Management Techniques: To minimize power consumption while maximizing performance, AMD designed power management algorithms to optimize for typical use, rather than peak computation periods that occur only briefly during the most demanding workloads.
KEY OUTCOMES To demonstrate the potential environmental benefits, if all laptops projected to be in use in 2020 were to achieve AMD’s energy efficient goal, the energy savings could be more than 18.4 billion kwh, equivalent to power produced by 3,500 wind turbines or 3.3 coal-fired power plants. In year four of its six-year journey toward its 25x20 goal, AMD is on track to achieve its target. AMD has
achieved as much as a 50 percent reduction in use phase electricity consumption and carbon emissions within a single product generation. In addition, significant advances in performance improvements have enabled greater productivity from faster processing speeds. In achieving 25x20, AMD will exceed traditional computer energy efficiency improvements by 70 percent by 2020. Meeting this goal means that an AMD-based laptop will use about one-fifth the power of one from 2014, while on average completing a computing task in one-fifth of the time. Setting this goal and striving toward it across all AMD product lines has helped to shape the culture of AMD innovation, business priorities and motivation, and pride of engineers and business teams. The 25x20 Initiative has fostered an entrenched culture of innovation and sustainability that new employees enter when joining the company.
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INNOVATION
LENOVO’S LOW-TEMPERATURE SOLDER CUTS GREENHOUSE GAS EMISSIONS When lead-based solder was phased out from the industry and new environmental regulations such as the EU’s Restriction of Hazardous Substances Directive (RoHS) came into place in the early 2000s, electronics manufacturers switched from a leadbased to a tin-based solder process. While the removal of lead was friendlier to the environment, the tin-based solder had some drawbacks. It required more heat when used in manufacturing, so its use consumed more energy and consequently created more carbon emissions. The high temperature also increased the risk of heat damage to the electronic components, potentially increasing waste and affecting product reliability. Lenovo assembled a cross-functional team of more than 20 engineers to search for a low-temperature solder (LTS) process that could be applied to devices using printed circuit boards.
APPROACH AND SOLUTION There are only four components to the electronics assembly process using tin-based solder: tin-based solder, “flux” (an additive to help the flow of the solder), time in the oven, and temperature. The challenge for Lenovo was finding the right proportion and combination of these four components to enable successful electronics assembly at lower temperatures. The team tried thousands of recipes for an LTS solution, running experiments on more than 3,000 boards; each run of 30 boards took 2-3 weeks. It took a year and a half until the team determined its new LTS process, which applies solder at a maximum
Lenovo estimates an annual savings of 5,919 metric tons of CO2 emissions, equivalent to removing more than 1,200 passenger vehicles from roads for one year. 18
temperature of 180 degrees Celsius, created a joint that had the same strength as the current high-temperature process that uses 250 degrees Celsius. Notably, by using existing materials for the solder paste and the same manufacturing equipment, LTS does not add cost.
KEY OUTCOMES The team worked diligently to validate the process and realize expanded LTS use within Lenovo. In 2017, Lenovo began using LTS on the ThinkPad E Series and ThinkPad X1 Carbon. Throughout 2017, Lenovo implemented the new LTS process on eight SMT (surface mount technology) lines. By the end of 2018, Lenovo aimed to have 24 SMT lines with two ovens per line using the new process. Lenovo’s engineers determined how much energy is saved with LTS, and consequently the CO2 emissions saved, on a per-unit basis for notebooks and tablets. In applying the LTS process to 24 surface mount technology (SMT) lines and two ovens, Lenovo estimates an annual savings of 5,919 metric tons of CO2 emissions, equivalent to removing more than 1,200 passenger vehicles from roads for one year. Credit Suisse research estimates that a total of 325.3 million notebooks and tablets were shipped globally in 2017. If the LTS process had been used in manufacturing those products, Lenovo estimates that more than 65,000 tons of CO2 emissions would have been saved. This metric provides some indication of the massive amount of CO2 emissions that could possibly be saved by LTS in the future. Lenovo’s plan is to share the LTS process with partners and competitors alike. As the first major step for sharing the invention across the industry, Lenovo has finalized an agreement with the solder paste manufacturer that allows the manufacturer to begin selling the solder paste to other companies. Using the paste requires technical know-how that the paste manufacturer will be allowed to provide.
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IMPLEMENTATION
THE JABIL FAMILY LOOKS AFTER YOUR FAMILY Jabil Chihuahua faced a challenge with absenteeism and turnover related to healthcare issues of employees and their families. The site determined that more than 6,000 cases of absenteeism and 300 cases (equaling 30 percent) of resignations per year were due to employee health or the health of a family member. The Mexican health care system is costly and underfunded, and patients wait hours to be seen and treated. A single visit to a public health facility can cost upwards of 50 percent of the average Mexican weekly salary, not including hours away from work. In a country with a high concentration of single parents, there can be immense physical, financial and psychological pressure on employees when their child is sick. After exploring how other industries in Mexico addressed these challenges and not finding a best-practice solution, Jabil devised its own solution aimed at providing critical health services that eliminate the need for employees to choose between work and taking care of their families.
APPROACH AND SOLUTION Jabil allocated nearly $60,000 to refurbish its existing Jabil Chihuahua health facility. The plan for the clinic was to provide four key areas of service free of charge: nursing, medical care, prevention and pharmacy. Nursing would include patient check-ups, medication administration and education. Medical care would encompass medical consultations,
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prescriptions, minor procedures and health counseling. Prevention covered vaccinations, family planning and management of chronic conditions such as high blood pressure and diabetes. The pharmacy would prescribe medications at no cost. The facility would not only serve employees during working hours, but also operate as a clinic for direct family members, and would be open both during working hours and when the plant was not operating.
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Over the course of five months, medical devices and furniture were purchased, medications were provisioned and staff were hired and trained. It opened in April 2016.
Seventeen-thousand people could benefit from the Jabil medical center, including employees and their direct relatives, representing 2 percent of the population of Chihuahua.
KEY OUTCOMES
When the project was initiated, Jabil knew it would have a positive impact on the Jabil family, but there were several outcomes that were perhaps undervalued at the project inception. The motivation, loyalty and commitment that the program drove in the employees was overwhelming – not only for employees with small children, but also the complete workforce. It was expected that there was going to be the improvement in family health, but a reduction in stress and improvement in general well-being was also evident.
The Jabil family clinic conducted more than 3,000 consultations and 1,500 vaccinations in its first year. About 90 percent of the healthcare was provided to employees’ children under the age of five. After two years, employee turnover due to family health-related issues was down 65 percent, and absenteeism due to health was down 75 percent. The Jabil clinic also reduced the typical waiting time from 340 minutes in a public clinic to only 20 minutes at its facility.
This is a sustainable project that can be modeled in one form or another across different geographies dependent upon their health care system, and is particularly beneficial where there is a mix of challenging factors such as a high percentage of single parents. The project was shared with Jabil Guadalajara and Juarez, and can also be replicated in countries with social and economic structures similar to Mexico, such as Brazil.
After two years, employee turnover due to family healthrelated issues was down 65 percent, and absenteeism due to health was down 75 percent.
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IMPLEMENTATION
WORKER HEALTH AND SAFETY TRAINING USING MOBILE TECHNOLOGY
The health and safety of workers across Dell’s supply chain is a key priority for the company. Dell believes workers should be protected from risks associated with the manufacturing of its products and provided with a safe working environment. After its biennial supplier audits revealed some nonconformance issues in the health and safety area – specifically chemical, fire, and machinery safety – Dell partnered with 20 of its suppliers’ factories to benchmark workers’ knowledge of health and safety topics and to empower its suppliers to build their own, long-term sustainability practices through online and in-person trainings.
APPROACH AND SOLUTION Dell offers suppliers a variety of online and in-person trainings, on topics ranging from working hours to environmental management, which they can cascade to their workers. Last year, nearly 800 unique participants from more than 290 supplier factories were trained on the RBA Code of Conduct and supplier management systems. Participants in the RBA e-Learning Academy went on to conduct team study sessions within their factories – benefiting nearly 8,000 workers. To help suppliers scale their training efforts, Dell sponsored a health and safety training, delivered directly to workers on their mobile phones. Dell utilized a mobile training platform as research revealed it can be difficult for suppliers to pull large groups of people off the manufacturing floor for training, yet 80 percent of workers in its suppliers’
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factories use mobile phones. Because mobilebased training is delivered directly to workers, it is cost-effective for suppliers and easy for Dell to scale globally. To launch the training program, Dell asked workers at the 20 supplier factories to complete a baseline survey that enabled the company to track each supplier’s performance. The training program consisted of 13 mandatory elements that addressed key safety risks, including three courses created by each factory. Modules were completed within minutes and the gamified-learning design makes the training easy to engage. Dell customized the mobile-based training on health and safety, using suppliers’ and workers’ feedback to tailor the modules to meet their needs and take advantage of the platform. The trainings use videos, animation and quizzes to create a fun and engaging experience that covers topics such as machine safety and emergency response. All modules last less than five minutes to complete. Beyond these courses that cover critical safety topics, the mobile training app expanded to various training capabilities through optional courses for workers to enhance their knowledge in the areas of health, career development, communication skills, technical abilities and certifications and training. For Chinabased suppliers, Dell used the WeChat app to further educate and engage workers, regularly sending health-related articles and sponsoring a video competition among workers to build excitement about using the platform.
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KEY OUTCOMES Dell’s mobile training solution allows the company to leverage backend analytics, complete with dashboards and reports, that provide an instant view of performance and survey results to enable Dell to easily and clearly track the implementation of the trainings. Results reveal that the training led to significant improvements. For example, 74 percent of workers know chemical names, while the industry level is 54 percent. Scores in its participating factories improved to 78 percent after workers completed the training. A follow-up survey identified that 85 percent
In just nine months, more than 35,000 workers at 20 supplier factories completed the mobile training. A follow-up survey revealed that workers’ knowledge improved in all areas, orientation training effectiveness increased, and Dell received positive feedback from participating suppliers.
of workers understood machine safety check policies after this training, compared with 75 percent prior to completing training. In just nine months, more than 35,000 workers at 20 supplier factories completed the mobile training. A follow-up survey revealed that workers’ knowledge improved in all areas, orientation training effectiveness increased, and Dell received positive feedback from participating suppliers. The areas with the greatest increases in RBA audit compliance related to subjects covered by the mobile training program: factories complying with machine safeguarding provisions increased by five percentage points, up to 98 percent, and emergency preparedness compliance increased by six percentage points. Dell’s surveys show the training improved workers’ scores on health and safety questions by up to 10 percentage points in one year, and suppliers say the trainings are fun, engaging and cost-saving. According to the suppliers, Dell’s mobile training is more convenient, interesting and cost-effective when compared with traditional courses. Since the results and feedback of its first year of training were highly effective, Dell will continue to scale the mobile training initiative.
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IMPLEMENTATION
WOMEN IN FACTORIES LEADERSHIP PROGRAM
The women who power China’s factories can often face tough odds in getting ahead. Chinese women frequently face gender discrimination, sexual harassment and inadequate access to health information and services. HP believes that promoting diversity and empowering employees within its supply chain strengthens its business, drives innovation and improves local economies. Through programs like Plan W and the Women in Factories Leadership Program, HP aims to improve the skills and well-being of 500,000 employees in its supply chain by 2025. HP first implemented Plan W at nine supplier sites in partnership with its customer Diageo, which had a similar vision to empower women across all socio-economic profiles. Plan W provides women with training and practical skills including effective communication, time management, problem solving, and decision making. HP then launched a similar program for a cohort of women at all its major suppliers in Chongqing. In this program, women are trained to become advisors, peer educators, and support group leaders on topics developed by the workers.
APPROACH AND SOLUTION To continue the efforts from its Plan W program, HP partnered with Business for Social Responsibility (BSR) to launch the Women in Factories Leadership Program in 2018. To overcome challenges associated with suppliers supporting the investment in women’s training, HP developed several tools to help build buy-in and commitment from factories early in the program. HP selected suppliers with which it had mature business relationships and that were familiar with its social and environmental policies and standards. HP provided a full orientation prior to launching the program so suppliers understood the business case, could express concerns and, finally, make a formal commitment. HP and BSR then delivered a kick-off meeting to give factory management and workers an overall understanding of the program. BSR then organized meetings among BSR, HP and the factory management (especially the production manager and human resources) to mutually learn more about opportunities and gain support for future implementation.
Through programs like Plan W and the Women in Factories Leadership Program, HP aims to improve the skills and well-being of 500,000 employees in its supply chain by 2025.
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BSR conducts an initial baseline assessment and subsequently collects monthly reports that track trainings, peer educator outreach, and the number of workers reached. This information helps suppliers monitor and share their progress with buyers and calls attention to the areas that may cause extended delays. Women in the program have opportunities throughout the sessions to offer suggestions for areas they would like to dive into more deeply.
KEY OUTCOMES Results from the first cohort of the Women in Factories Leadership Program will be available in 2019. Women completing the Plan W program at the end of 2017 reported effective communication with
peers and increased confidence and assertiveness. HP used participant surveys throughout its Plan W program to evaluate the effectiveness of various trainings, and to help improve the topics and approaches in future engagements. Based on the feedback, 42 percent reported an improved ability to navigate stressful work situations, 29 percent increased their time management at work, 27 percent communicate effectively with colleagues, leaders, and family members after the program, and 22 percent reported improved decision making. Nearly 190 women received additional training as peer educators to foster a cycle of peer education and mentorship in their communities. Collectively, HP and Diego influenced the lives of 20,000 women in its joint supply chain.
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IMPLEMENTATION
EQUALITY AND INCLUSION FOR PEOPLE WITH PHYSICAL CHALLENGES In 2010, a team at the Jabil site in Tiszaujvaros, Hungary learned that the United Nations estimates 50 to 70 percent of working-aged people with disabilities in industrialized countries are unemployed. Hungary reported a meager 10 percent of people with disabilities having the opportunity to work. When Jabil looked at how its own organization provided for the physically challenged, the company found only 0.35 percent of its workforce had disabilities, spurring them to act. The challenge was immense – not only were physically challenged people not applying for jobs, but the site was yet not ready to receive them. As Jabil set out to identify, hire and integrate more physically challenged employees into its Tiszaujvaros workforce, it was clear that a comprehensive analysis was first needed to gain management support and financial approval. Analytical processes such as Ishikawa principles were used to develop a framework of understanding as to the root cause for the lack of physically challenged staff.
APPROACH AND SOLUTION The analysis, management interviews and employee surveys revealed several challenges the program would need to address. The first challenge was where to find and how to connect with this potential labor
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pool, and how to build trust to help them engage with Jabil. The roles and location where potential newly hired employees would be placed had to also be carefully considered. The life and heartbeat of a factory is the shop floor, and Jabil wanted to ensure physically challenged hires were not simply relegated to administrative roles in an office environment. To identify potential applicants and interested parties, Jabil undertook a significant outreach program to registered local and national disabled groups and associations. These efforts helped make communities aware of Jabil’s initiative, and helped Jabil understand best practices for engaging with physically challenged communities. Several groups invited Jabil staff to visit their member meetings, make presentations and answer questions about the company. This activity was a major breakthrough in building trust between the communities and Jabil, and in identifying potential applicants. Jabil’s on-site medical staff were involved in the complete process, from supporting the evaluation of workplace requirements to understanding the conditions of new employees so their medical needs could be addressed to the same standard as any other employees. Together with the HR industrial engineering team, they conducted evaluations as to what workstations, locations and activities would be suitable for physically challenged employees to enter.
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In the first year of the outreach program, the physically challenged headcount increased from 13 to 90, achieving Jabil’s goal of reaching 2 percent of its employee base. It was determined that the need for factory facilities to be adjusted was minimal. Being a modern factory, lifts were already available and key services including canteen and HR were located on the ground floor. The company invested in more visual aids to support emergency evacuations, and made adjustments to security-controlled entrance gates and other potential physical obstacles to ensure the needs of potential employees in wheel chairs, or with other mobility challenges, were addressed.
KEY OUTCOMES
A major investment was made to improve communications within Jabil, and to educate employees to ease doubts and dispel existing biases. Employee surveys initially revealed concerns over bringing disabled people into the factory environment due to questions around their ability to be productive. One initiative to counter these prejudices was sign language training for line supervisors and HR staff, so newly hired deaf employees had full understanding and integration into the organization. There were 125 Jabil applicants for the first sign language course, demonstrating the enthusiasm of the existing staff to embrace diversity.
The program and shifting workforce demographics were well-received across the entire Tiszaujvaros team. Additional benefits achieved included increased loyalty, motivation and morale across the employee base; positive gains in Jabil’s reputation in the local community; new employees who were extremely diligent, completely committed and exceptionally loyal; and an overall increase in both the standard of living and social equity provided to physically challenged hires.
Overall, 150 applications were received from people with physical challenges. In the first year of the outreach program, the physically challenged headcount increased from 13 to 90, achieving Jabil’s goal of reaching 2 percent of its employee base. Ninety percent of 90 new hires were placed on the production floor. Most importantly, a blueprint of success was established for other Jabil sites to follow.
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IMPLEMENTATION
ERADICATING RECRUITMENT FEES FOR WORKERS
With the elimination of worker recruitment fees, ST Muar employee morale, job satisfaction and productivity increased.
Recruitment fees are a key issue when hiring foreign migrant workers (FMWs) in Malaysia due to unethical recruitment practices. Traditionally, the majority of costs were borne by workers with fees reaching 3-6 months of a worker’s salary, and a potential risk of bonded labor. This was the case with STMicroelectronics in Muar, Malaysia, until 2015 when ST Muar eradicated all recruitment fees for workers in both its operations and supply chain.
Source-country agents are required to provide the breakdown of the recruitment fee charges to ensure the agent does not impose any unreasonable charges on ST, and that the agent does not undercharge to get the business and then take the remainder of the fees from the workers. During the selection briefing, all workers are informed about the fees paid by ST, to avoid any further charges being imposed by the agent.
Encouraged by the Malaysian law to incite companies to stop using outsourcing agents, ST Muar switched from a significant percentage of FMWs hired through outsourcing agents to 100 percent recruited as direct employees. Now, instead of going through Malaysian outsourcing agents, ST Muar recruits FMWs directly from the source countries, and agents are prohibited from appointing sub-agents.
Suppliers that fail to comply with the RBA standard must provide corrective and preventive actions. ST Muar supports the suppliers with remediation plans and helps them accomplish tangible and measurable outcomes in the short, medium and long term. If non-conformities still exist after the corrective action plan has been executed and the verification audit has been carried out, the business relationship is discontinued and the contract is terminated.
APPROACH AND SOLUTION ST recruiters travel to source countries to brief local agents on terms and conditions of employment prior to the interview and selection process. Due diligence audits are conducted before any contract is signed, and annual compliance audits verify agents’ practices. Source country agents are prohibited from appointing any sub-agents to carry out the recruitment process. If ST Muar finds out that the agents are using sub-agents, they immediately cancel the contract.
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If the investigation confirms that a worker has paid recruitment fees, ST Muar reimburses the fees within a month of the discovery. If multiple cases are discovered, in addition to reimbursing the workers, the business relationship is terminated, the agent is blacklisted and a formal complaint is lodged with the source country’s embassy in Malaysia. ST Muar regularly provides training sessions and material to agents and suppliers, and immediately informs all stakeholders of any changes to the code
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and standard. The company also conducts annual briefing sessions and refresher training on the RBA code for all workers. Source-country agents and on-site suppliers are requested to participate in any training or briefing provided by RBA in Malaysia. ST Muar has regular dialog sessions with workers, suppliers and source country agents. Workers are free to speak up and highlight their grievances without fear of retaliation. Various grievance channels are available for all workers, including written and anonymous, and are widely publicized around the site. The program also covers on-site suppliers, for services such as cleaning and security that may use FMW labor.
KEY OUTCOMES Third-party RBA and customer audits confirm the effectiveness of the program. In recent audits, there were no findings of recruitment fees. Employee morale and engagement has increased, as has productivity, with ST Muar receiving several internal ST awards for its manufacturing performance.
Since the beginning of the program, ST Muar terminated business with three suppliers due to the lack of progress on recruitment fees, and one source-country agent due to holding the workers’ school certificates and secretly collecting additional recruitment fees. Two on-site service companies did not have their contracts renewed due to holding passports, failing to reimburse recruitment fees, and levying deductions. ST Muar volunteered to participate in RBA’s Workplace of Choice pilot on recruitment and working conditions, and was ranked first out of 22 Malaysian factories regarding the elimination of worker recruitment fees. The survey also showed that ST Muar is ranked first for the overall happiness of workers with their jobs. One of the reasons for high job satisfaction is because workers are free from debts as recruitment fees are paid by the company. The program has also enhanced employee loyalty: 79 percent of FMWs plan to stay until the end of their contract, and the majority are willing to work beyond their normal two-year contract period.
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