Verité’s report on slavery in Malaysian supply chains prompted EICC to clamp down on recruitment fees. Now it is urging other sectors to follow
The electronics industry is one of the most vulnerable to forced labour because of its extensive use of migrant labour in countries such as China and Malaysia, and the fact that each brand has many thousands of suppliers.
But it also has one of the longest standing industry-wide efforts to tackle it. In 2004 eight companies, Dell, Hewlett Packard, and IBM and some of their large tier one suppliers, got together to agree a common code of conduct.
What began as the Electronic Industry Code of Conduct evolved into the Electronic Industry Citizenship Coalition (EICC), which today has 110 members, including electronics, retail, auto and toy companies, and thousands of tier one suppliers required to implement the code of conduct.
Rob Lederer, executive director of the coalition, told Ethical Corporation that the code is backed up with an online risk assessment tool to rate suppliers, and a robust auditing programme for those judged high risk. “We require members to do risk assessment on 80% of their spend,” he says. “What’s unique is that we represent the entire supply chain, brands, contract manufacturers and component manufacturers.”
However NGOs say this approach has not been enough to meet the scale of the challenge.
A benchmarking report of 20 electronics companies by the NGO KnowTheChain in the summer found that although the sector demonstrates high levels of awareness of the risk of forced labour, with 18 publicly committing to addressing it in the supply chain, “far fewer of these companies also have strong processes in place to implement these commitments”. While the highest scorers, HP (72) and Apple (62), “demonstrate strong transparency on the steps they are taking” the report said, more than half score under 50 points overall and another three –Canon, BOE Technology, and Keyence – score below 15. Significantly, none of the three laggards is a member of EICC.
The KnowTheChain report followed one by Verité into Malaysia’s electronic industry in 2014, which found that nearly one third of all migrant workers in the supply chain were in bonded labour.
Lederer, who spoke at the UN Forum on Business and Human Rights in Geneva this month, says the Verité report came as a huge wake-up call for EICC, prompting it to revise its code of conduct in 2015 to address the increasingly widespread practice of workers paying fees to recruiters, which turns them into bonded labourers. It adopted the Employer Pays Principles championed by Leadership Group for Responsible Recruitment (LGRR).
These stipulate that: workers are not to be required to pay any fees for employment; there is no unreasonable restriction on their freedom of movement, including the retention of passports; they are given written contracts in their native language prior to departing their home countries; and are free to end their employment at any time.
“The Verité report caused us to dig deep into forced labour,” says Lederer. We probably have the toughest code of conduct out there now.”
Asked how EICC polices adherence to the code of conduct, Lederer says members are required to verify compliance twice a year. They must do audits on 25% of their at-risk suppliers, and close out all “priority findings”, those that pose risk to life or health, including child labour and slavery. EICC has also introduced a supplemental audit tool, specifically for forced labour situations. “It’s not good enough to put words on a piece of paper,” says Lederer. “We had to develop tangible tools and solutions to address the complex challenges of forced labour. That’s what we think is unique among industries.”
Lederer said members have been dropped for non-compliance and he is convinced the revised code of conduct is having an impact, although it only took effect in January this year.
“We are starting to get the IT systems in place to do more data mining and benchmarking of the industry as a whole so we can show the world, in a more transparent way, how we are improving”, he said.
This includes a pilot project called Workplace of Choice in 20 factories in Malaysia, where workers are surveyed in detail about their situation, factory managers are helped to set up worker communications programmes, and migrant workers are briefed about their rights prior to leaving their home countries. The most recent addition are 24-hour helplines allowing workers to draw attention to any grievance.
He said he hoped the programme would be rolled out globally, with China the next location.
EICC is also looking beyond the electronics industry, challenging other industries to follow its lead. “None of these problems is unique to the electronics industry. Forced labour is prevalent in all manufacturing. Our goal is to export our successes and encourage other industries to meet the challenge as well.”
ICTI Care is working on developing a similar code of conduct incorporating the employer pays principle for the toy industry, and there is also action on this in the construction industry, he said. At its annual meeting this month, EICC began a multi industry initiative to allow its tools to be available to other industries. EICC already heads up the Conflict Free Sourcing Initiative, a multi-industry programme that provides tools to smelting operations to do due diligence in their supply chains, taking risk assessment all the way down to the mines.
Cimarron Nix is programme manager of human rights and supply chain responsibility for Hewlett Packard Enterprise, one of the founding members of EICC and the LGRR. She says changing mindsets across industries is not easy, but making all industries sign up to the employer pays principle is the only way to bring about real change. “Just as with the focus on bribery and corruption, we need all industries to adopt a similarly high standard to foster an environment where predatory practices are aggressively rooted out and where ethical partners are rewarded, thereby giving employers and their customers greater assurance that workers in their supply chains are being recruited with dignity,” she said.