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Good Business

We’ve scaled Fairtrade gold

Good Business

We have paved the way to source more Fairtrade gold! Together with Fairtrade, we have partnered with Hirose Electric Co., Ltd. in Japan in order to integrate more Fairtrade gold into our supply chain. Our relationship with Hirose and Fairtrade continues our support of ASM gold projects and miners. This is an incredible stepping stone for the larger vision of a Fairtrade and Fairphone partnership to scale responsible gold in the electronics sector.

Going for (fairtrade) gold

While there are over 40 different materials in a smartphone, gold is one of Fairphone’s 14 focus materials announced earlier this year and has been a target material for us since day one. It is a material often mined artisanally.

Since 2016, we have been able to integrate Fairtrade gold into the supply chain, yet, this accounted for just a small percentage of all the gold used in our devices, as gold is used in very small quantities, spread across many different components of the phone. Though a good start, we always aim to do better and find ways to encourage the industry to adopt similar practices. This means we needed to build a supply chain model that could easily be replicated and scaled in the electronics sector. So in great Fairphone fashion, we put our heads together with our partners – Fairtrade and other suppliers – to come up with the best solution to increase fairly sourced gold in our supply chain. We are still exploring how this can be further replicated in the average electronics supply chain.

The model

With the Fairphone 3, we, along with the Fairtrade Foundation, have begun to explore a mass-balance sourcing model to begin to scale Fairtrade gold in the electronics sector. Under this model, gold mined in a more responsible fashion from the Fairtrade certified mine remains separated from other non-certified gold until leaving the refinery. However, after this point it gets shipped to the Shanghai Gold exchange and can enter many different supply chains, which means it is no longer traceable. To ensure that we are able to calculate the amount of gold we are using in our phones, and to ensure that we pay an equivalent amount of Fairtrade Premium, Fairphone has its own internal robust due diligence and tracing system.

We are continuing to work with Fairtrade to explore how we can bring more of our supply chain into the Fairtrade system, so that we, and you our customers can be confident that our materials are sourced sustainably, and that the gold miners we source from receiving a fair price and a Fairtrade Premium for their gold. While the electronics supply chain is rather complex, our ongoing innovation in this space will enable us to develop smoother, more logistical and less expensive supply chains. Without this model, neither Fairphone or our customers are able to be in the Fairtrade system or create the desired impact at the level of mines.

Fairtrade gold on the go

With the development of Fairphone 4, we started our creative thinking journey by examining what would be the key next step to scale up Fairtrade gold in the electronics sector, knowing supply chains are intertwined. We came to the conclusion that by onboarding a components manufacturer with global market reach and the potential to supply most electronics brands, we can lead the way for exponential growth of Fairtrade gold. Win, win!

So far, we have eight China-based suppliers committed to Fairtrade and we have just onboarded a ninth – our first Japan-based supplier, Hirose Electric Co., Ltd. Hirose is that top-tier player in the electronics industry that we were searching for. What does this mean exactly? It means that by collaborating with Hirose, we were able to increase the volumes of Fairtrade gold that we source through inclusion of our latest model’s connector supply chain.

This is another step in the evolution of the Fairtrade gold used in the electronics model from Fairphone 2 (2016), to Fairphone 3 (2019) now to Fairphone 4 – we tailored the scalable (gold) integration model so that it is suitable for international component manufacturers, in this case Japan.

 

Note: Fairphone calculates the amount of gold used and pays an amount equivalent to the Fairtrade Premium to the refiner who sources this amount of gold from the Fairtrade mines.

Similar to the Fairphone 3 model, the Fairtrade certified gold remains separate until the refiner level. Once at the Shanghai Gold Exchange (SGE) it is then mixed with non-Fairtrade gold. Our component supplier in Japan (Hirose) then purchases enough gold from SGE to cover the amount of Fairtrade gold claimed by Fairphone. With this model, Fairphone contributes to the equivalent premium of the Fairtrade gold claimed for its supply chain and production volume.

 

Since Fairtrade gold is mass-balanced with non-Fairtrade gold in the SGE, that means that the certified gold is not guaranteed to be in the product. However, our Japan pilot model builds on the mass-balance model and tracks the gold used along the value chain between factories owned by the same supplier. We are continuing to work with Fairtrade to explore how we can bring more of our supply chain into the Fairtrade system.

Keep striving

The Fairtrade Foundation and Fairphone are working together to understand how we can integrate responsible gold throughout the supply chain as a part of the European Partnership of Responsible Minerals (EPRM) Responsible Peruvian Gold project. The project supports ASM miners in South Peru and aims to formalize their activities and further adopt responsible practices – enabling them to operate more safely, safeguard the environment and improve their productivity.

By piloting this model with Hirose, we aim to bring learnings to this program and support the promotion of responsible mining practices and the sustainable development of our supply chains.

Increasing the demand for and the supply of responsible gold has a positive impact on the ASM communities mining the gold. And, in addition, we keep our promise of continuing to strive for a fairer electronics industry and a more sustainable phone.

Get in touch with Fairphone or Fairtrade to learn more about the current model and how to become an early adopter of the updated gold guideline, which Fairtrade and Fairphone are currently working on.

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