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Comparing Fairphone’s approach to a sustainability label

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This week Südwind, SOMO and the GoodElectronics Network published a report in which Fairphone’s approach for social and sustainability standards are compared with those of a well-established sustainability certification, TCO Certified.

The report concludes that Fairphone scores better overall in its criteria than TCO certified devices. While we believe in our approach to create social and environmental sustainability in our supply chain, we feel the work of TCO Development is equally praiseworthy. Established labels and certifications push the industry to adopt increasingly stringent requirements, but need to stay attainable enough for manufacturers to adopt them as standard.

In this blog post, I would like to reiterate our position towards certifications, build upon some of the results of the report and respond to issues that the report finds Fairphone does not sufficiently address.

Certifications: Shortcomings

Some time ago, our colleague on the legal team Raluca, wrote a blog post about making sustainable choices and the role of certifications in this process. In that piece she points out that certifications provide a set of criteria that are easily identifiable for different stakeholders (consumers among others) against which, judgements can be made (i.e. is this product fair enough for me?). But certifications often fail in providing the holistic, dynamic, content-specific perspective that’s necessary to navigate our complex and culturally diverse world in which globalized supply chains are framed.

A standard is an agreed convention containing criteria to be used consistently as rules or guidelines to achieve a certain purpose (i.e. being more sustainable). Certification is a procedure by which a third party gives proof that a product is made or a company operates according to a given standard. This procedure normally results in achieving a certain label (eg, an eco-label). A certification body is the third party that is commissioned to certify a product or company. These certification bodies are very often private companies.

Certifications can be granted to a specific product or to a company as a whole. While product certifications are probably easier to understand for consumers (eg, the coffee I buy is Fairtrade Certified) we believe a more systemic, company approach is necessary (eg, B Corp certifies a company in its entirety).

I myself am not an assessor but I have learned quite a lot from my colleagues in the past years. An example that illustrates the shortcomings of the process followed by some auditors is the Rana Plaza disaster in 2013 in Bangladesh. Eight floors of a sewing workshop collapsed killing 1100 people and leaving 2000 injured. This production site had been certified following well-known standards on international labor and safety standards, but the auditors failed to identify the structural problems of the building. (Source: The Wall Street Journal)

This happening triggered a very different approach by creating “The Accord on Fire and Building Safety in Bangladesh.” This proactive program not only assured inspection in production plants but also set up a five year agreement between brands and trade unions to ensure a safe working environment in the Bangladeshi clothing industry.

Not only checklists, but much more. We are proud that our Chief Sustainability Officer, Sean Ansett, was part of the inception of the Accord and remained interim executive director until 2014. Sean has extensive international experience in the field of ethical trade and is involved in many related initiatives, including Fairphone.

In order to change how systems work we need methodological approaches (like standards) used in combination with procedures that allow enough freedom to extend the assessment when more in-depth research on a specific item is deemed necessary. An assessment should be regarded as a baseline, as an entry-point to analyzing a context. Issues may not be identified initially, but only after a longer term of engagement with the stakeholders at hand.

Every issue is context-dependent and normally needs a dedicated process to tackle it. At Fairphone we rely on transparency: we publish raw data from us and third party organizations assessing issues in the system behind the production of our products. We also work in working groups of knowledgeable (often local) individuals and organizations that advise us along the way to develop meaningful interventions to a specific context like our Worker Welfare Fund.

Certification-WWF-video

Sean talks about the Worker Welfare Fund at the manufacturer of Fairphone 1. Watch the full video.

But why certification, then?

On the other hand, we believe certifications can have a positive impact in the long term in traditional industries. Mainly to act as a guiding principle to move towards an objective, push for related legislation and provide a framework of reference for consumers.

A good example is visual ergonomics in computer monitors, which has improved dramatically in the last 20 years (you remember getting headaches from using your computer some time ago?). We can thank TCO Certified for this advancement, as they have been instrumental in becoming a widely used and recognized certification among consumers and procurers to prove improvement in this area.

We at Fairphone often look at the criteria of different standards (or sometimes opinions of certain organizations) to make sure that we are on the right track and drive the right decision-making and prioritization. Examples of this are the B Corp certification, which helped us to formalize certain processes in our young, fast-growing organization before certification, or our collaboration with iFixit which helped us make a more repairable device when designing Fairphone 2.

Certifications can also drive the creation and adoption of legislation as we have seen in the sphere of social entrepreneurship with B Corporation certification.

B Corp is a certification managed by B Lab, a non-profit that has pushed successfully for legislation to companies with a higher mission than profit. Laws have been passed in 26 US states creating a new type of corporation—the benefit corporation. Some examples in the EU are Belgium and the United Kingdom. These legislative frameworks best meet the needs of entrepreneurs and investors seeking to use business as a driver for good. Although, Fairphone is B Corp certified, the Netherlands still does not offer a legislative framework for social enterprises that favors the creation of social enterprises. Read our blog to learn all the ins and outs of B Corp certification.

This week I just came back after a couple of days in Berlin, where we have a strong and critical community that helps us stay sharp and stick to our mission. There, Tina and I were reminded about the importance of having a clear system for accountability and a framework of reference (eg, how good are you doing?) (Thanks Ben!). Thus, certifications naturally came up in our discussion quite often as a way to “show what you are doing,” and to “show that you’re better.” Certifications provide a convenient guideline and categorization to drive consumer choices (eg, what we buy).

We did not start Fairphone in order to criticize the industry but to inspire it and work together in innovative interventions (in a different way of doing things). But inspiring is regarded as too soft or vague; some people just want hard facts. This is even more so as we operate in an industry that is accustomed to using certifications as a way to create market differentiation. Transparency and honesty are the backbone of how we communicate our achievements and failures, as the reality is more complex than what certain ratings can communicate.

Certification-Hi-P

Fairphone team members during a walkthrough at Hi-P, the manufacturer of Fairphone 2. Viewing SMT (Surface Mount Technology) machinery, which contribute to conflict-free tin being integrated with a soldering machine.
Trade-offs also deserve to be told. With every decision we make, we learn something new. It’s part of our mission to make these difficult decisions transparent, so that others players in the industry may profit from our trial and error approach and learn from them as well.

Of course, these considerations do not exclude us from the duty of being accountable, on the contrary, we are expected to be a frontrunner to this end. (When I’m asked where I work, I almost immediately get the question, “What’s really fair about the Fairphone?”) This is why we welcome independent comparative studies such as the report at hand (or a previous Rank a Brand Report on Sustainable Electronics) and publish third-party assessments.

If you do want to compare…

I hope I explained the context enough before we get deeper in the comparative study of the GoodElectronics Network. In this report the approach of Fairphone has been compared to TCO Certified Smartphones. “SOMO has used a number of CSR rankings for electronics as reference: the Eco-score of Vodafone, the Greenpeace Guide to Greener Electronics, and Rank a Brand (…)” (page 9)

The Good Electronics Network is an international network of organizations for human rights and sustainability in the electronics industry, including trade unions, grassroots organizations, campaigning and research organizations, academia, and activists.

TCO Certification is powered by TCO Development, an organization owned by TCO, a confederation of workers’ unions in Sweden that work in different initiatives to bring the same objectives for workers’ welfare and sustainability they have at home to the rest of the world.

TCO Certified is a product specific certification that ranges in topics from social and environmental sustainability, as well as health and safety across the life cycle of the product. Reviewing and developing criteria of TCO Certified is an ongoing process. TCO Certified for Smartphones v.2 (and other products) is now open for public consultation.

Every three years the process is formalized and a new generation of TCO Certified criteria is published. Products that hold this certification need to follow a process of recertification or else they will lose their distinction. This way TCO can push manufacturers further in the objectives of the certification scheme, step-by-step after each certification release. Thus, certifications push brands or manufacturers to adopt these new, more strict standards to gradually improve the actors in the electronics supply chain.

Some changes from the 1.0 version to version 2.0 include restricting more phthalates in the products, the requirement to include information of the percentage of post-consumer recycled plastic content and proof of involvement in programs aimed at establishing a conflict-free supply chain of Tantalum, Tin, Tungsten and Gold (3T+G).

Paving the way towards fairer electronics

We are glad to see the positive comments in the report regarding our interventions in product design, production and the operationalization of our values. According to Südwind we go beyond industry standards on 20 of the 34 sustainability criteria. However, we would like to comment on the five criteria which the report states we are not sufficiently addressing.

The report points out that Fairphone:

    1. Does not provide proof of responsible tax payments.

We are aware about the importance of this, but we have not followed (yet) any certification nor made our financial reporting public. We do pay all necessary taxes in the Netherlands and all other European countries in which we are required to pay taxes (ie, according to our level of sales in every country where we sell phones). If you are curious about other pricing transparency, you can see a full cost breakdown of the Fairphone 1 and a cost breakdown for Fairphone 2 is being developed and will be published soon.

    1. No information on improvement of recyclability of device.

This is definitely the case for Fairphone 1, which this report is based on, as our resources and capacity meant we had to focus on design for recyclability in a future device. With Fairphone 2 we go much further to make the device easier to maintain and repair. That also means that it is easier to dismantle which is an important part of recyclability.

    1. No promotion of responsible use of hazardous substances.

The issue of hazardous substances is something that we are currently working on with Fairphone 2. It is our ambition to map substances used in the manufacturing of the components that end up in our phone. We have processes in place to enforce compliance with the law through our supply chain, but that does not ensure transparency in itself. We need to keep working on partner relationships in our supply chain to gain more insight in what is used in our product (eg. substances that are not restricted by law).

More importantly, we have avoided hazardous substances as much as possible in the design already, for example glue, coatings or halogens. We will be able to give deeper detail as we get further in the development of Fairphone 2.

    1. No effective grievance mechanisms at the factory level.

Grievance mechanisms in this comparison report refer to the availability of formal ways for workers to file a complaint at a company level (hotlines, complaint boxes, email addresses). The ‘company level’ in this research does not consider Fairphone alone, but rather the availability of these mechanisms within suppliers in our supply chain. And indeed, there is still a lot of work required in this area, for example in China where many of the Fairphone’s suppliers and sub-suppliers are located. Fairphone believes in worker empowerment which does not immediately translate to a single tool or mechanism, but depends much more on the way workers and management go about utilizing them (how effective these tools are).

When we perform social assessments with our top-tier supplier, we include looking at the effectiveness and performance of existing channels for communication, grievances and worker representation. Until now, we have done this with a Worker Welfare Fund as a means to strengthen workers’ ability to raise and address issues they feel are important.

    1. No mention of an environmental management system.

The manufacturer of the Fairphone 2, Hi-P, does have a certification on the ISO 14001 standard and they are required to recertify regularly. As explained in this post, this certification should only constitute a baseline analysis. We we will work together with assessors and the manufacturer to keep engagement and make improvements in time.

A certification is one tool of many

Certifications are useful in some situations (for example, for consumers making a quick product choice), but they also have shortcomings. Because Fairphone uses an approach that includes different tools, where a certification is just one, we find it difficult to compare our approach and a certification system, like TCO Certified.

For instance, while certifications certify that a set of standards are met, Fairphone in its entrepreneurial spirit would like to do more than a traditional, checklist audit system and investigate deeper the root causes of systemic problems. That being said, certifications push the industry forward in some ways, for instance showing the five areas of improvement that we have addressed above. They also provide a mechanism for (larger) companies to show their progress in sustainability standards or to create market differentiation.

Going forward, we will continue to follow the public debate around standards, certifications and assessments. The complexity of the electronics industry makes it difficult to come up with a one-size-fits-all plan of action. We support innovative tools that allow us to assess a fuller picture of a supply chain’s improvements and shortcomings.

Author’s Note: We want to thank Südwind, SOMO and the GoodElectronics Network for their knowledge and constructive criticism. We also want to thank the team at TCO Certified for their comments on the published report.

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