The Covid-19 global pandemic has disrupted all aspects of our daily lives. From how we work, go to school and even spend our free time, the pandemic continues to affect how we live. The pandemic also highlighted how dependent we are on the global supply chain for products like PCs that help us work, study and even enjoy some downtime playing games and binge watching our favorite shows. As a global technology company, our supply chain plays a critical role in Microsoft’s mission – empowering every person and organization to achieve more.
The global supply chain has a tremendous impact on human rights and sustainability. At Microsoft, our values of integrity, accountability and respect are the foundation for how we approach responsible sourcing in our supply chain. This year’s theme for the Microsoft FY20 Devices Sustainability Report is “Integrity Built In.” This represents our commitment to set high standards and goals to further reduce the impact our products have on the world around us. Integrity is reflected in the products’ entire life cycle – from design, sourcing, manufacturing, transport, use and end-of-life.
Here are some highlights from the report that demonstrate our responsible sourcing commitments and progress:
Zero tolerance of forced labor
We set high standards for all our suppliers and we work with them to support their people and improve their operations. We hold ourselves and our suppliers accountable for addressing human rights, labor, environmental health and safety and ethical business practices upstream in our supply chain. This includes addressing the risks inherent in raw materials extraction, harvesting, processing, refining and transportation – including unsafe working practices as well as forced labor and child labor. We require our suppliers to incorporate our standards in their own sourcing practices. Our Supplier Code of Conduct prohibits forced labor, including all forms of prison labor.
Audits and due diligence
We actively monitor 100% of all directly contracted supplier facilities involved in our responsible sourcing program. In FY20, all factories were monitored through a risk-based approach via tools such as risk assessments, factory visits and third-party audits. We are constantly improving our supplier due diligence through supplier contracts, training, audits and verification. Suppliers are required to correct any nonconformances within a set amount of time or risk termination as a Microsoft supplier. Of 239 supplier factories audited in FY20, 198 had implemented these plans; 42 were identified as not having sufficiently implemented compliance plans and these were all corrected or mitigated during the fiscal year.
Supplier health and safety
The Covid-19 pandemic has been an unprecedented challenge for our supply chain partners and their workers. Health and safety is our top priority, and this includes our suppliers’ workers. As the pandemic spread around the world, we shared workplace safety best practices with our suppliers based on World Health Organization guidelines. We aligned with the Responsible Business Alliance and provided guidance to our suppliers on working hours and overtime rules. We helped ensure that overtime was voluntary and paid at a premium, and that suppliers continued to comply with applicable laws and Microsoft’s standards during the pandemic. We also provided a workers’ hotline to give workers in our supply chain an opportunity to report concerns anonymously. In FY20, we received 160 cases and resolved 156, with four cases still under investigation. We work directly with suppliers to address concerns and implement corrective measures.
Responsible sourcing of raw materials
While Microsoft does not directly harvest or mine raw materials like tin, tantalum, tungsten, gold and cobalt, we use them in our devices. Various reports have highlighted concerns over the social and environmental impacts of cobalt mining, including child labor and unsafe working conditions. Microsoft is committed to driving change and accountability in the mineral supply chain through robust supplier due diligence. For example, with cobalt, we work directly with our battery suppliers to gather smelter information from their sub-tier suppliers. We have continued to hone our survey and data collection processes. Our active battery cell suppliers have identified 19 confirmed cobalt smelters located in China, Finland, South Korea and Russia.
Partnerships for change
On-the-ground engagement is a critical enabling step toward responsible sourcing. In FY20, Microsoft partnered with Pact, an international NGO with a long history of promoting responsible sourcing. This year Pact focused on promoting opportunities for women through literacy training and micro-banking program opportunities to empower women to lift themselves out of poverty. Pact’s award-winning WORTH program brings women and older girls together in groups of 20 to 25 to save money, access credit and help start small businesses. Microsoft also actively supports the Initiative for Responsible Mining Assurance (IRMA) and has a leadership role on IRMA’s board of directors. Due to the Covid-19 crisis, auditing and verification of mine performance became increasingly more challenging. Microsoft partnered with IRMA to enable remote sensing and monitoring technologies to enhance mine assurance programs and ensure proper due diligence of mine performance.
The road ahead
We know this is just the start of our sustainability journey and that there are more challenges ahead. With each new challenge we will learn and adapt. We will always take on each new sustainability challenge with the same core values of integrity, accountability and respect. We look forward to sharing more about our progress and also hearing from you. Please get in touch with us if you have any questions or comments on our report at: [email protected].