DRIVING CHANGE FOR A SUSTAINABLE€¦ · DRIVING CHANGE FOR A SUSTAINABLE ... Created Employee Health and Welfare Task Force Clarified roles of task forces and working groups for

DRIVING CHANGE FOR A SUSTAINABLE ELECTRONICS INDUSTRY 2010 EICC

® Annual Report

2

©2011 Electronic Industry Citizenship Coalition, Incorporated. All rights reserved.

REPORT INFORMATION

Reporting Principles

This report was published in September 2011 and covers the Electronic Industry

Citizenship Coalition's® (EICC

®) performance and activities in the 2010 calendar

year (with limited references to activities taking place in 2011). To select content

for inclusion in this report we applied the following principles from the Global

Reporting Initiative (GRI):

Stakeholder Inclusiveness. The EICC engaged key stakeholders to

try to ensure this report better responds to their expectations.

Stakeholders provided feedback on the EICC 2009 Annual Report, a

2010 Annual Report outline, and a draft of this report .

Context. The EICC reflected on the broader sustainability context and

its impact on EICC activities in 2010.

Completeness. The EICC reviewed all Work Group, Task Force, and

Board activities, as well as all material issues and indicators of

performance. Unless otherwise noted, the data in this report was

generated from the 2010 Membership Survey.

Materiality. The EICC prioritized topics for discussion in this report

based on their potential impact to the success of the EICC and its

member companies, and their significance to EICC stakeholders.

Report Data

The data contained in this report was gathered through a membership survey

conducted in May 2011. Except where specifically mentioned, the presentation

of information in this report referring to either “respondents” or “members”

references this percentage of member survey results.

Special Thanks

The EICC would like to thank our member companies who provided case

studies and information on their company activities for inclusion in this report.

We also thank BSR for its insights and assistance with writing this report.

Finally, we thank As You Sow and RESOLVE for their time and feedback on the

EICC’s reporting activities. Their invaluable insight and feedback enables us to

better serve the needs of our external readers.

Notes

The EICC maintains a policy of not speaking on behalf of individual member

companies. The views expressed in this report are those of the EICC

organization and do not necessarily reflect those of individual EICC members.

The trademarks of specific tools and resources listed in this report are owned by

the EICC, Global e-Sustainability Initiative (GeSI), and/or partner organizations,

and should not be used without permission.

Report Feedback

Your feedback on this report is appreciated. We rely on comments from our members and stakeholders to help us identify areas for improved activity and reporting in future years. Please provide feedback by completing a brief survey, or send comments to: Wendy Dittmer EICC Director of Communications [email protected]

_____________________

This report, along with

the EICC’s other

reports, can be found at

www.eicc.info. The

EICC decided to save

resources by making

this report available only

in an electronic format.

We ask that you

consider the

environment before

printing this report.

___________________

http://www.surveymonkey.com/s/STN9CPN

mailto:[email protected]

http://www.bsr.org/

http://www.asyousow.org/

http://www.resolv.org/

http://www.eicc.info/

3 _____ Letter from Chairman of the Board

____________________ Year in Review

___________________ This is the EICC

___________ Issue-Specific Discussions

____________ Stakeholder Engagement

____________ Acronyms and Definitions


TABLE OF CONTENTS

Letter from John Gabriel, Chairman of the Board ............... 4

Year in Review ........................................................................ 6

Key Performance Indicators .................................................. 8

This is the EICC ..................................................................... 11

Issue-Specific Discussions

Assessment and Monitoring ...................................... 16

Special Topic: Emplolyee Health and Welfare ......... 21

Capability Building ..................................................... 23

Environmental Sustainability ..................................... 26

Mineral Extraction ....................................................... 29

Stakeholder Engagement ..................................................... 32

Acronyms and Definitions ................................................... 35

EICC VISION

A global electronics industry supply chain that consistently operates with social, environmental, and economic responsibility.

EICC MISSION

To enable and encourage our members to progress towards the EICC vision through a common code of conduct, collaborative efforts, and shared tools and practices.

4 __ Letter from Chairman of the Board

Year in Review

__________ Key Performance Indicators

___________________ This is the EICC





LETTER FROM JOHN GABRIEL, CHAIRMAN OF THE BOARD

As the Electronic Industry Citizenship Coalition® (EICC

®) entered its

seventh year, the organization found itself walking the line between

responding to immediate and critical issues in the supply chain while

supporting our members in their continuous improvement journey.

During the first half of 2010, the EICC was saddened by the reports of several

worker suicides in China. The EICC acted immediately to better understand the

situation and to understand what role a member-driven industry association can

contribute to for positive impact. A task force was formed to work with experts,

stakeholders, and members for over 10 months to agree on findings and

recommendations. We continue to put efforts into understanding how best to

make positive impact on an extremely complicated situation.

Also during the same period, the Dodd-Frank Wall Street Reform and Consumer

Protection Act passed by the U.S. Congress included new legislation on “conflict

minerals” in supply chains. The law requires companies that submit SEC filings to

disclose their efforts to determine whether their products use tin, tantalum,

tungsten, or gold from the Democratic Republic of the Congo or an adjoining

country. The joint investment by the EICC and the Global e-Sustainability

Initiative (GeSI) since 2009 to develop protocols and mechanisms for companies

to identify ways for “conflict-free sourcing” proved the right priority, recognizing

another critical and complex issue in our supply chain. Now we are seeing

participation from industries beyond the electronics supply chain in the Conflict-

Free Smelter program, helping to ensure conflict-free sourcing of minerals.

The EICC operates in an environment that is in a constant state of change and

requires balance between what we can anticipate and what we must react to.

The forward-thinking nature of some our work helps us develop leadership and

best practices, while responding to immediate and critical issues helps us build

partnerships, develop industry understanding, and foster a root cause and

solutions-oriented approach.

Between the immediate issues and the long-term goals is the daily work of the

EICC to improve the social and environmental responsibility of our supply chain.

Together, the Board of Directors, the EICC members, and members of the global

electronics supply chain work to mobilize business to implement policies and

programs into their company processes. Their work is underpinned by practical

tools, shared learning, and continuous improvement.

In 2010, we improved our own assessment and monitoring capabilities by

investing in our technology platform for data collection and tracking. We also

launched a new auditor training program to improve quality control of those

http://www.gpo.gov/fdsys/pkg/PLAW-111publ203/pdf/PLAW-111publ203.pdf

http://www.gpo.gov/fdsys/pkg/PLAW-111publ203/pdf/PLAW-111publ203.pdf

5


LETTER FROM THE CHAIRMAN

auditors that assess for EICC members. In conjunction with GeSI, we also

developed training modules on health and safety, and worker-management

communications in an effort to strengthen the capabilities of our members and

their suppliers to improve worker welfare.

We collected more data than ever before on the carbon emissions in our supply

chain, and expanded our focus on water by including additional questions on

water usage, pollution, and disposal. By understanding our industry’s contribution

to greenhouse gases, we aim to influence the energy efficiency of an industry

and encourage individual company improvement in our increasingly interlinked

supply chains.

I hope you will see that this Annual Report outlines the breadth and depth of the

work we did over 2010—what we had to prioritize in the face of new challenges,

and what progress we made over the year. The report illustrates our many

accomplishments and what we hope to achieve next year. Our strength lies in our

ability to be flexible and help members address critical issues in the global

electronics supply chain.

I would like to thank the members of the Board of Directors for their service over

this year and the dedication of all of our membership toward creating a more

sustainable electronics industry. And finally, I would like to extend an additional

welcome to the 16 new members that joined the EICC in 2010.

John Gabriel Chairman of the Board Electronic Industry Citizenship Coalition

®

.

“Our strength lies in our

ability to be flexible and

help members address

critical issues in the global

electronics supply chain.”


Year in Review

__________ Key Performance Indicators

___________________ This is the EICC





YEAR IN REVIEW Commitments Achieved Looking Ahead

GOVERNANCE More information >

Continue to provide leadership

and stability in the organization, setting the strategic direction and

allocating resources

Created Employee Health and Welfare Task

Force

Clarified roles of task forces and working

groups for efficient roles and responsibilities

Review the EICC’s

governance and strategy, with the input of members and

stakeholders.

MEMBERSHIP More information >

Continue to welcome new members

Implement process for assessing members against organizational

requirements

Expand relationships with other

industry groups

16 new members in 2010 for a total of 59 member companies

Developed membership compliance program to enable assessment of members’ activity

toward Code adoption.

Continued collaboration with GeSI and

developed relationships with other industry groups to expand impact—AIAG and IDH

Electronics Sector project

Grow membership to reflect the electronics value chain

Encourage use of shared processes, such as the use of

Validated Audit Process (VAP) tool

CODE OF CONDUCT More information >

Engage stakeholders in Code review process on relevant topics

Benchmark Code against latest international standards

Focused efforts on awareness, adoption, and implementation of the Code by members

through development and ratification of membership compliance program

Compare EICC Code to other codes (e.g., retail) for best

practices

Start planning process for the

2011-2012 Code Review

Increase stakeholder

engagement for 2011-2012 Code Review process

ASSESSMENT AND MONITORING More information >

Offer auditor certification training

in all regions

Expand the VAP to other

geographies in Southeast Asia and Latin America

Explore a recognition program for facilities that undergo a validated

audit and address their identified issues

Developed auditor certification program with

focus on Labor and Ethics

Completed 97 VAP audits in China, Malaysia,

Mexico, Philippines, South Korea, Taiwan, and Thailand

Developed corrective action management and closure audit process

Shifted from the site overlap request process to a 24/7 single-payer request model

Formalized audit firm training and performance management

Increase the number of audits

globally

Deploy new assessment

technology platform

Enhance VAP processes to

drive participant satisfaction

Explore a recognition program

for facilities that undergo a VAP audit and address their

identified issues

CAPABILITY BUILDING More information >

Launch e-Learning for facility

managers in the supply chain

Develop health and safety training

program

Develop Worker-Management

Communication program

Developed health and safety training, piloted in

Shanghai, China

Began development of Worker-Management

Communication Program

Conducted KPI benchmarking project across

EICC and GeSI members

Launch Health and Safety to

members

Launch Worker-Management

Communication Program to members

Release the Key Performance Indicator benchmark study

.

http://www.aiag.org/scriptcontent/index.cfm

http://www.duurzamehandel.com/en/home

http://www.duurzamehandel.com/en/home

7


YEAR IN REVIEW

Commitments Achieved Looking Ahead

ENVIRONMENTAL SUSTAINABILITY More information >

Increase participation in EICC Carbon Reporting System (CRS)

Support research on a simplified carbon footprinting approach

Provide training on energy efficiency

Increased member participation by 125%, resulting in a 306% increase in suppliers

nominated to participate

Included questions on water in the 2010

CRS questionnaire

Provided integrated calculation tool in

CRS questionnaire for new reporters

Conducted two trainings on the Carbon

Reporting System

Conducted two Energy Efficiency

trainings, one in English, one in Mandarin

Participated in BSR’s Electronics Supply

Networks and Water Pollution in China research

Finalize water questions in the CRS questionnaire

Update carbon questions in the CRS questionnaire

Develop methodologies and metrics for better carbon emission

and water data analysis

Provide more resources for

supplier capacity building

Recruit 50% of OEM/brand

members to use reporting tools

MINERALS EXTRACTION More information >

Publish results of supply chain

research

Work to develop tantalum smelter

verification plan

Collaborate with tin industry on

development of mine-to-smelter identification scheme

Published supply chain research: Tracing

a Path Forward: A Study of the Challenges of the Supply Chain for Target

Metals Used in Electronics

Launched the Conflict-Free Smelter (CFS)

program for tantalum smelters

Partnered with the ITRI Tin Supply Chain

Initiative (iTSCi) to conduct a pilot program to verify the potential for

responsible tin sourcing in the Democratic Republic of Congo

Hosted three supply chain workshops on mineral extractives issues

Complete CFS protocol for tin,

tungsten, and gold

Conduct smelter assessments for

tin, tungsten, tantalum, and gold smelters

Host additional multi-stakeholder working sessions

Release a due diligence tool for suppliers to identify sourcing to the

smelter level

Update CFS program, as

necessary, based on U.S. SEC final ruling

STAKEHOLDER ENGAGEMENT More information >

Implement stakeholder

engagement road map

Continue to host educational

sessions involving external stakeholders

Develop process for regular information sharing with

stakeholders

Collaborate with stakeholders on

selected projects

Held three member educational sessions

Engaged core collaborators (FLA, INFACT) in the Worker-Management

Communications Program training development

Conducted stakeholder engagement with many organizations for the CFS program

Engaged key stakeholders in China on employee health and welfare

Obtained feedback on the 2009 Annual Report

Continue core collaborations for

capability building and training and CFS programs

Expand cross-industry MOUs

Engage stakeholders in the 2011-

2012 Code Review process

Engage stakeholders in the Annual

Report process

WORKING HOURS More information >

Gather member input to evaluate tool effectiveness

Reconfirmed Working Hours as one of the top non-compliance areas of the EICC

Code

Provided specific recommendations for a

renewed focus and work plan on working hours

Develop specific Working Hours KPIs and Metrics

Advance a multi-industry and NGO engagement

Develop specific training and capability-building strategy to

enable redudction in Code-related working hours nonconformances

by 2014.

http://www.eicc.info/documents/EICCWWFinalReport.pdf


http://www.resolv.org/site-eiscm/files/2011/02/Tracing_a_Path_Forward-A_Study_of_the_Challenges_of_the_Supply_Chain_for_Target_Metals_Used_in_Electronics.pdf




http://www.conflictfreesmelter.org/


Year in Review

________ Key Performance Indicators

___________________ This is the EICC





KEY PERFORMANCE

INDICATORS

In 2009, we adopted key performance indicators (KPIs) to better track and

monitor our progress toward our mission over time. The KPIs are intended

to reflect the breadth and depth of work necessary for achieving our

mission.

In 2010, we collected data on the agreed KPIs to assess our organizational

progress in achieving our mission (see below). We also launched our

Membership Compliance program in 2010 (see This is the EICC), a program that

assesses member progress in adopting the EICC Code of Conduct. To better

align the KPIs with the Member Compliance program and the EICC

organizational strategies, select KPI definitions have been refined. As the EICC

matures in both KPI reporting and in measuring compliance to our membership

requirements, additional KPIs may be added, removed, or clarified. While we do

not intend to change KPIs frequently, we feel these enhancements are part of our

continuous journey of improvement, and look forward to presenting the most

meaningful measurements for our organization. In this year’s report, where

definitions of KPIs have changed from 2009, it is noted in the comments.

KPI data was collected primarily by an online survey of members; 75 percent of

Full Members and 79 percent of Applicant Members responded to the survey

request. Data includes responses from 11 companies that joined the EICC during

the 2010 calendar year, and had substantially less time to integrate EICC tools

and practices into their operations and supply chain. Data from an additional

three members that joined in December 2010 has been excluded from the

results, as those members did not have a reasonable amount of time to complete

EICC-related activities. Some members did not provide information for every data

point requested, changing the sample size for individual indicators.

The focus of this analysis is to consider the performance of the organization as a

whole and our performance year to year. With different membership requirements

for Applicant and Full Members, we split out performance between those two

groups and tracked their performance year to year. We also provide the overall

performance for members regardless of membership status. We expect to

continue this type of reporting in the future.

KEY PERFORMANCE INDICATORS 9


Indicator

Performance

Comments 2009 2010

2010 Full

2010 App

Adoption of Code of Conduct

Member adoption of Code of Conduct for own manufacturing services facilities and supplier facilities

74% NR NR NR Performance reflects respondents who have adopted or aligned their code of conduct for their owned operations to the EICC Code, and adopted the EICC Code verbatim as the code of conduct for their suppliers. Starting in 2010, we will report the next two KPIs (the individual components of this KPI) and not the summarized version.

Member adoption of Code for own manufacturing facilities

NR 98% 100% 92% Performance reflects respondents who have adopted or aligned their code of conduct for their owned operations to the EICC Code. Organizationally, respondents increased the alignment of their internal code with the EICC Code of Conduct. The EICC expects that this number will remain high since it is an expectation of membership in the EICC.

Member adoption of Code for supplier facilities

NR 63% 79% 25% Performance reflects respondents who have adopted the EICC Code verbatim as the code of conduct for their suppliers. While Full Members have increased their performance from the 2009 organizational average, Applicant Members have not adopted the Code verbatim to the same level. This is expected, as newer members require additional time to change internal business practices and reliance on the Code in supplier relations. By the end of 2010, 75% of Applicant Member respondents had at least aligned their supplier code to the EICC Code.

Risk Assessment

Members using the Self-Assessment Questionnaire (SAQ) for their manufacturing facilities

1

81% 83% 92% 70% Performance reflects the portion of respondents that have completed an SAQ for at least one of their owned manufacturing facilities.

Member facilities1 with

completed SAQ (as a percentage of members’ total facilities)

62% 69% NR NR Performance reflects members’ depth in completing SAQs across their facilities, and is measured as an average across membership. Note: Data split not available for 2010 report.

Members auditing against the EICC Code

95% 89% 96% 73% Performance reflects the portion of respondents who have audited against the EICC Code for supplier facilities, based on those respondents who reported conducting supplier audits. Note that this represents a change from the 2009 calculation, where all respondents were included, regardless if the member conducted audits. The 2009 value has been restated to meet this criterion.

Tool Usage

Members auditing using EICC audit tools

62% 79% 88% 50% Performance reflects the portion of respondents using any of the EICC audit tools, including the EICC audit checklist and VAP. This is based on those respondents who reported conducting supplier audits. Note that this represents a change from the 2009 calculation, where all respondents were included, regardless if the member conducted audits. The 2009 value has been restated to meet this criterion.

1 These requirements pertain to a member’s own facilities, or a supplier that is ranked in member’s top 80 percent of direct suppliers by spending and

contracted to provide service or material input for member’s finished goods or services, or under the control of the member (e.g., member requires purchasing from the supplier), even if services or materials are not directly conveyed to the member. Any enhancements to these membership requirements are subject to the final membership ratification vote at the end of 2011.

KEY PERFORMANCE INDICATORS 10


Indicator

Performance

Comments 2009 2010

2010 Full

2010 App

Tool Usage

Members who subscribe to the E-TASC database

64% 58% 69% 27% Performance reflects the portion of respondents that are either a full or partial subscriber to E-TASC. Full Members increased their usage of E-TASC. However, the EICC is implementing a new technology platform in 2011; Applicant Members in particular have not subscribed to the existing platform. Due to the launch of the new platform, this is the last year this specific KPI will be presented.

Assessment Results

Average number of major non-conformances per facility

6.41 12 - - Performance in 2010 reflects an average across VAP audits. This is a change from 2009 when this KPI reflected a member self-reported value. While this number is almost double the 2009 number, it represents results from a tightly managed, high-quality process facilitated by the EICC Audit Program Manager. It is also important to note that there is a range of average non-conformances across countries, from a low of 3 in Thailand to a high of 17 in Mexico. The EICC expects this KPI to fluctuate in future years until the number of audits are generally balanced between the many countries where VAP audits are conducted, and more is known about the typical audit results in those countries.

Capability Building

Members who offer EICC training materials to employees or major suppliers

90% 78% 83% 67% Performance reflects the members providing training to either members or suppliers (e.g., e-Learnings). Full Member respondents provided less training in 2010 than they did the previous year. However, the EICC did not launch any major training programs in 2010; this number is not unexpected. Over two-thirds of Applicant Member respondents are showing their engagement in the EICC by training their suppliers using EICC tools. The EICC will analyze if these trends continue over time, particularly in years when new training materials are not released versus when training programs are launched.

Membership

Number of member companies

42 59 40 19 In 2010, there was a 40% increase in membership; 100 percent of members renewed their membership from 2009 to 2010.

Members who have fulfilled the requirements of full membership

74% 67% - - Performance reflects those members who have fulfilled all requirements of Full Membership as defined by the membership application. The aim for this KPI is to use information from the Membership Compliance program starting with the 2012 Annual Report. The primary reason for non-fulfillment of this requirement is the obligation to adopt the EICC Code of Conduct verbatim for a member’s supply chain code of conduct. Many who have not fulfilled this requirement have aligned their supplier code with the EICC Code.

11 ____Letter from Chairman of the Board

Year in Review

_________ Key Peformance Indicators

_________________ This is the EICC

__________ Issue-Specific Discussions

___________ Stakeholder Engagement

___________Acronyms and Definitions


THIS IS THE EICC The EICC is a membership organization aimed at driving efficiencies and

improvements in social, ethical, and environmental responsibility. This is

achieved primarily by promoting the awareness, adoption, and

implementation of a common standard, the EICC Code of Conduct.

The Code of Conduct

The EICC Code has evolved since its first ratified version in 2004. The Code is a

living document and reflects how the electronics industry has developed and

matured its corporate responsibility systems in the five core elements of labor,

health and safety, ethics, environment, and management systems. It is available

in 16 languages and draws from many international standards, such as the

International Labour Organization core conventions, SA 8000, Fair Labor

Association Code, United Nations Global Compact, and the Ethical Trading

Initiative Base Code. The Code is reviewed every three years; the next Code

review process will begin in 2011 and will engage members and stakeholders to

review and propose changes. For more information on the Code, click here.

Leadership and Governance

The EICC, governed by a Board of Directors elected by the membership, relies

on the input of its members to prioritize key issues for the organization to

address. Working groups and task forces are teams of member volunteers who

are tasked with the development of the shared tools and resources that members

can utilize to improve the social and environmental conditions in their own

operations and those of their supply chains. The EICC’s working groups—

covering topics such as auditing, environmental sustainability, and stakeholder

engagement—are governed by one or more elected Leads. Two working groups

are led in collaboration with the Global e-Sustainability Initiative (GeSI)—the

minerals extraction, and learning and capability working groups. These working

groups have two Leads, one from EICC and one from GeSI.

Board of Directors

John Gabriel, IBM Corporation

Chairman, Director of Oversight Elected 2007

Kate Cacciatore, STMicroelectronics

Director of External Relations Elected 2007

Zoe McMahon, Hewlett-Packard

Director of Capability Building

Elected 2010

Eric Austermann, Jabil

Vice-Chair, Director of Code Management Elected 2007

Bruce Klafter, Applied Materials

Director of Outreach Elected 2010

Steve Viera, Intel Corporation

Director of Measurement

Elected 2009

Deborah Albers, Dell, Inc.

Director of Special Projects Elected 2009

Stephanie Law, Celestica

Director of Asia Network

Elected 2011

______________________

The Code Review Process runs from August 2011 – April 2012. Submissions accepted until October 31, 2012. ______________________

http://www.ilo.org/global/standards/lang--en/index.htm

http://www.sa-intl.org/index.cfm?fuseaction=Page.ViewPage&PageID=937

http://www.fairlabor.org/fla/go.asp?u=/pub/mp&Page=FLACodeConduct

http://www.fairlabor.org/fla/go.asp?u=/pub/mp&Page=FLACodeConduct

http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html

http://www.ethicaltrade.org/eti-base-code

http://www.ethicaltrade.org/eti-base-code

http://www.eicc.info/EICC%20CODE.htm

http://www.eicc.info/Code%20Updates.htm

http://www.eicc.info/Code%20Updates.htm

12


THIS IS THE EICC

The Membership

The EICC membership has grown in breadth and depth, and ended 2010 with 59

total members representing the full spectrum of the industry's value chain. It

includes manufacturers, software firms, electronics retailers, telecommunications

firms, raw material providers, and manufacturing service providers. While the

growth of membership presents challenges such as the broad diversity of social

or environmental responsibility knowledge, development, and maturity, it also

provides enormous value for the membership and the industry as a whole by

driving collaboration on:

A common approach for social and environmental responsibility,

endorsed by a large number of industry players and key stakeholders

Industry-wide access to tools such as the Self-Assessment

Questionnaire (SAQ), the Validated Audit Process (VAP), risk audits, and

training

Shared learning from leadership companies to advance best practices

throughout the supply chain (such as on health and safety training

development through our learning and capability building working group,

and carbon, waste, and water target-setting through benchmarking in our

______________________ The top three key internal barriers to implementation and advancement of supply chain corporate responsibility programs are: Inadequate funding

and human resources Insufficient time to

develop program

Lack of internal team awareness, support, and approval

______________________

13


THIS IS THE EICC

environmental sustainability working group)

In order to drive continuous improvement in the industry and to maintain a basic

standard of membership expectations, on July 9, 2010 the EICC members

ratified the requirements for Full and Applicant membership and defined

implications of non-attainment of those requirements.

Implementation of this new Membership Compliance program begins January 1,

2011, with 2011 as a learning year for members and the EICC. Information

gained from the first year will inform the EICC on any necessary enhancements

to the program; changes will be subject to ratification by members at the end of

2011 for 2012 implementation. Note that the membership requirements must be

met by each member on an annual basis.

Core elements of the Full and Applicant membership requirements that were

ratified in July 2010 include:2,3

Activity Applicant Member

Full Member

Meet Full Membership requirements After 2 years

Actively participate in EICC activities

Acknowledge inclusion in the EICC

Adopt the Code of Conduct for own operations and supply chains

Identify high-risk facilities3 within their own operations, as well as those of Tier 1 suppliers

Conduct audits in at least 50 percent of the high-risk facilities and 25 percent of members’ suppliers’ high-risk facilities

Put in place corrective action plans for any identified gaps in compliance to the Code of Conduct

After the final ratification of the Membership Compliance program, the EICC will

review the integration of membership compliance metrics with the existing

organizational KPIs. As of this 2010 report, none of the existing KPIs reference

data from the Membership Compliance program.

2 These requirements pertain to a member’s own facilities, or a supplier that is ranked in member’s top 80 percent of direct suppliers by spending and contracted to provide service or material input for member’s finished goods or services, or under the control of the member (e.g., member requires purchasing from the supplier), even if services or materials are not directly conveyed to the member.

3 Any enhancements to these membership requirements are subject to the final membership ratification vote at the end of 2011.

3 A “high-risk facility” is a member facility, supplier, or supplier facility that scores 65 percent or less on a total of at least five sections of an EICC risk assessment tool (e.g. RA1, SAQ), or scores similarly on an equivalent company risk assessment tool. The presence of any priority non-conformances also indicates an immediate high-risk status.

CASE STUDY ___________________

Download the case study about being a new EICC member, featuring XP Power!

______________________

http://eicc.info/documents/XPPower_CSFinal_09_2011.pdf





14


THIS IS THE EICC

AMERICAS Adobe Systems, Inc. Advanced Micro Devices,

Inc. Amkor Technology, Inc.* Analog Devices, Inc. Apple, Inc. Applied Materials, Inc. Cabot Corporation Celestica, Inc. CIF Mineração S/A* Cisco Systems, Inc. Dell, Inc. Eastman Kodak Company EMC Corporation Hewlett-Packard IBM Corporation Intel Corporation International Rectifier Corp.* Jabil Lexmark International, Inc. Medtronic* Micron Technology, Inc. Microsoft Corporation ModusLink* NVIDIA Corporation ON Semiconductor Oracle America, Inc. Sanmina-SCI Corporation Seagate Technology Skyworks Solutions, Inc.* Spansion Western Digital Xerox Corporation

EMEA Edwards, Ltd.* Logitech, Inc. Noventa, Ltd.* Numonyx Oce N.V. Philips STMicroelectronics

TT electronics Plc

ASIA-Pacific Acer Inc. Chicony Electronics, Co.

Ltd* Fabrinet* Flextronics International Foxconn Global Advanced Metals

Pty Ltd. (formerly Talison Minerals, Pty. Ltd.)

Hitachi GST HTC Corp* KYE Systems Corp.* Lenovo LG Electronics* Lite-On Technology

Corporation Pegatron Quanta Computer Samsung Electronics Sony Corporation Taiwan Chinsan

Electronics Industrial Co., Ltd.*

Wistron Corp.* XP Power*

MEMBERSHIP BY MEMBER TYPE

Applicant (19) Full (40)

MEMBERSHIP BY COMPANY SIZE

Annual Revenues

<US$10 billion (61%) Annual Revenues

>US$10 billion (39%)

MEMBERSHIP BY HEADQUARTERS REGION

15


THIS IS THE EICC

Looking to the Future

The EICC is committed to improving social and environmental responsibility.

While the EICC aims to expand membership to reflect the full electronic industry

value chain, it is focused on attracting members that are committed to advancing

their social and environmental responsibility first and foremost. Therefore, in

2012, we look forward to ratifying the final Membership Compliance program,

laying the foundation for measuring member progress in adoption and

compliance to the EICC Code of Conduct. We will also review how data from the

Membership Compliance program could be integrated into the organization’s key

performance indicators.

For the long term, the goal is to continue to establish the EICC Code as the

standard in the electronics industry. To advance this goal, we will continue to

make more companies aware of the business case for social and environmental

responsibility.

Finally, the EICC is committed to member satisfaction. We understand that there

is always room for improvement in the benefits that we provide, and we plan to

continue improving the EICC for all its members and stakeholders.

______________________

93 percent of respondents have at least aligned their own operations and supply chain codes of conduct with the Code

______________________


Year in Review


__________________ This is the EICC

________ Issue-Specific Discussions




ASSESSMENT AND MONITORING Foundational aspects of the EICC include awareness, adoption, and

implementation of the EICC Code of Conduct. Equally important is to

understand if members and their suppliers are adhering to the EICC

standards specific to the Code of Conduct, and how gaps in Code

compliance are being closed to improve performance in the supply chain.

The step-by-step EICC approach is designed to drive long-term change, rather

than short-term fixes. It emphasizes a risk-based approach to supply chain

management, supplier ownership, and responsibility for workplace practices. The

approach assumes that companies will invest in capability building for continuous

improvement.

To support this supplier engagement model, the EICC continues to create and

enhance a suite of tools to streamline member efforts for Code implementation,

and to ultimately improve social and environmental conditions in the electronics

supply chain. Members can use the tools, such as the Self-Assessment

Questionnaire (SAQ) and the Initial Risk Assessment (RA1) in their existing supply

chain programs, and/or the tools and processes developed by the EICC and

GeSI.

http://www.eicc.info/documents/SAQ_Overview.pdf

http://www.eicc.info/documents/SAQ_Overview.pdf

http://www.eicc.info/Tools.htm

17


ASSESSMENT AND MONITORING

One tool developed by the EICC is the Validated Audit Process (VAP), a program

that provides a consistent, high-quality audit service for companies to assess and

monitor performance against the Code.

Progress in 2010

Since its launch in 2009, the shared VAP has undergone improvements to

streamline efforts and to provide added value to members and their suppliers.

We anticipate the VAP will continue to evolve, with improvements driven by

feedback from users, customers, and stakeholders. In 2010, the EICC evolved its

VAP system through:

Streamlined audit request model. To reduce planning time and provide

ongoing audit request availability, the VAP auditees now own their audit

process and audit reports, and proactively share the resulting report with

their customers. This new process has streamlined the approach, spread

the cost conformance more equitably across the supply chain, and has

increased supplier accountability. It also builds a view of differentiation

between those companies taking proactive steps to conform to the Code

and those that do not.

Developed end-to-end solutions to encompass Corrective Action

and Audit Closure. Companies can now purchase corrective action

management as an extension of the VAP. This process prepares and

assists auditees in closing non-conforming issues with sustainable

solutions. This helps prepare for a verified follow-up “Closure Audit” to

ensure identified gaps have been adequately addressed.

Strengthened the EICC’s relationship with audit firms. In 2010, the

EICC created an audit firm performance management process to drive

consistent quality in the VAP audits. VAP audits are assigned based on

performance, with regular feedback and training provided by the EICC to

audit firms.

Launched the Labor and Ethics Auditor Certification Program. To

clarify and formalize auditor expectations, this certification program is

offered globally to any audit company, company employee, or individual.

The intention is to provide participants with necessary competencies to

successfully perform VAP audits and to inform the EICC quality

expectations. The highly interactive workshop covers social systems

auditing, investigative skills, management systems, validation and

reporting, and defines the Validated Audit Process.

Impact

The EICC provides assessment tools and resources to enable members to make

social and environmental improvements in their own operations and those of their

supply chains. While EICC member companies are responsible for making and

measuring actual changes in their supply chains, the EICC measures the

effectiveness of members by analyzing the use of EICC tools by our members.

Supplier Risk Assessment

83 percent of the membership survey respondents completed at least one

______________________

Validated Audit Process The EICC VAP provides independent third-party audits for companies, their suppliers, and potential suppliers, at the facility level. The VAP uses EICC-approved audit firms managed by the EICC Audit Program Manager (APM), who ensures the integrity of the process and adherence to the EICC VAP Quality Guideline. The auditee owns the resulting report and determines which of its customers have access to it. ______________________

http://www.eicc.info/documents/VAPIntroductionOverview.pdf

http://www.verite.org/Training/AuditorTraining

18



SAQ for their own facilities. On average, respondents completed SAQs

for 69 percent of their facilities, measured as an average across all

member facilities.

80 percent of survey respondents require their major, direct, or strategic

suppliers to complete SAQs; 87 percent of members require their high-

risk suppliers to complete SAQs.

The top two uses of the SAQ are to identify suppliers to audit and to

provide a baseline for continuous improvement discussions with

suppliers; 90 percent of respondents conduct supplier risk assessments.

Of those, 70 percent use either the RA1 or SAQ to prioritize supplier

assessments.

The top operational areas requiring focus, as highlighted by SAQ results,

include: labor and ethics management systems; labor and ethics policies

and procedures; and health, safety, and environmental policies and

procedures.

Audit

Unless otherwise indicated, data in the below graphs came from the

membership survey.

89 percent of respondents who conducted

supplier audits in 2010 did so against the

EICC Code using EICC tools or their own

tools. Respondents reported they audited

their supply chains using one or more of the

following methods:

The VAP program, after its successful launch in

2009, completed 97 audits in eight countries in

2010; 22 members participated in a VAP audit

either by completing an audit or requesting an

audit. The EICC is working to increase both the

number of audits and participation by members

in the VAP process as members switch to the

VAP program.

Note: respondents were able to select more

than one answer; the total percentage

equals more than 100 percent.

19



VAP audits are conducted with an audit protocol, references and guidance, real-time scoring, an audit

report, and trained and certified auditors. This tightly managed process found, on average, a higher

number of non-conformances than the numbers self-reported by members in 2009. Audits conducted

across members are less comparable due to the variations in audit processes and auditor training,

whereas the VAP process is structured to assure comparable data collection and accuracy. Therefore, the

EICC will be reporting VAP data moving forward.

It is important to note that the numbers of nonconformances are highly dependent on many factors,

including the region where the facility is located, type of operations, type of audit (initial or closure), and

legislative framework pertinent in the region. The typical range of nonconformances in a specific country

may vary greatly due to these factors.

The audit checklist features 168 possible Code non-conformances across environmental, health and

safety, management systems, labor, and ethics. Examples of major non-conformances include, but are not

limited to, use of: any type of forced, prison, indentured, or bonded labor; underage labor; disciplinary

wage deductions; or unsafe machinery. Examples of minor conformances include, but are not limited to:

delays or withholding of payments to workers; out-of-date environmental permits; inadequate efforts by the

facility to control ergonomic hazards; and inconsistent use of personal protective equipment (PPE), such

as respirators and hearing protection, when required to control worker exposures. It is important to note

that a minor non-conformance can be graduated to major non-conformance if the evidence and specific

situation substantiates raising the severity to major.

20



Looking Ahead

While the EICC has designed a wealth of resources to help members assess

risks, and identify and resolve non-conformances to the Code, a challenge

remains on how to unlock the full value of these tools. Building awareness within

the EICC member supplier community will be a focus area. Suppliers stand to

benefit the most from a sharable, high-quality audit process. These and parallel

efforts, such as the EICC Member Compliance program, will build momentum for

a consistent, high-quality industry solution.

The EICC is also committed to driving customer satisfaction for all organizations

that are part of the Validated Audit Process—EICC members, brands, and

auditees. The more the EICC can communicate and encourage companies to

take active steps in the EICC and view the VAP as an opportunity to identify and

resolve non-conformances to the Code, the broader the positive impact that

companies can have in the supply chain.

Labor Environmental, Health & Safety

General

Working hours: average hours worked, one day off in seven

Wage payments and benefits

Child labor avoidance through formal apprentice and educational programs

Labor and ethics risk assessment and management (ensuring proper risk assessments)

Occupational safety (controls for ensuring worker safety from workplace hazards)

Industrial hygiene

Emergency preparedness

Hazardous substances

Promulgation of the EICC Code to Tier 1 suppliers

Worker and staff education on the Code

The top audit non-conformances resulting from VAP and member-conducted audits range across labor, environmental, health and safety, and general categories. The most common non-conformances identified were:

______________________

In 2011, EICC is implementing a new technology platform, EICC-ON, which supports a standards-based approach for evaluating member and supply chain compliance and performance with the EICC Code of Conduct.

______________________


Year in Review


__________________ This is the EICC





SPECIAL TOPIC: EMPLOYEE HEALTH AND

WELFARE

The electronics industry was saddened when 13 workers committed suicide at an

electronics manufacturing facility in Shenzhen, China, over the first two quarters

of 2010. In response, the EICC immediately launched the Employee Health and

Welfare Task Force to gain greater insight into what factors destabilize the well-

being of employees working in the electronic industry supply chain.

Understanding that such incidents affect the industry as a whole, the Task Force

launched a three-phase process to:

Identify factors that affect employee welfare, with particular emphasis on

root cause analysis

Review the EICC Code to identify provisions that could be strengthened

in response to this issue

Develop action plans based on key recommendations from the Phase

One findings. The action plan will be implemented during 2011 in

coordination with the relevant EICC working groups.

In order to identify the many factors that contribute to employee health and

welfare, the EICC conducted a significant amount of research, with the aim of

understanding what role the EICC could play in contributing to and supporting the

prevention of more tragedies. This research included interviews and discussions

with six experts and the input of multiple Asia-based EICC member companies.

The EICC also hosted presentations and a discussion panel by experts from

government, academia, and nongovernmental employee service organizations at

the August 2010 EICC membership meeting in Shenzhen, China. The process

helped the EICC develop an understanding of six factors that impact Chinese

employees in the electronics supply chain.

The six categories identified for research and analysis were: cultural, societal,

industrial, corporate, facility (work location), and personal factors affecting

individuals that may impact their welfare as workers in the electronics supply

chain. The research found that the EICC is in the best position to contribute to

the industrial, corporate, and facility factors impacting worker health. However,

the research also noted that the EICC’s influence on these factors depends on

various levels of cooperation and resources from the industry.

The research confirmed the complexity of trying to understand the inter-related

and complex factors related to mental health and the well-being of workers in

China. One of the primary findings, however, was the necessity to make

significant progress in the area of reducing employee working hours. Although

the EICC has focused on working hours since 2009, it remains a challenging

issue for the industry, and one of the top nonconformances to the EICC Code,

22


EMPLOYEE HEALTH AND WELFARE

according to VAP and member audit results. The EICC has provided tools and

resources for members to make positive changes in their own operations and

those of their suppliers, but realizes it is critical to continue to focus on this

important aspect of its Code.

Therefore, in 2011, the EICC restarted the Working Hours working group with a

focus on:

Working with other industries and nongovernmental organizations to

identify best practices and approaches that can be leveraged in the

electronics industry

Collecting key performance indicator (KPI) data to improve and simplify

how members can manage working hours within their supply chains

Investigating how to leverage best practices and KPIs that enable

members to successfully implement a reduced working hours initiative

These strategies and goals aim to enable members to remove Code-related

working hours non-conformances by 2014.

The EICC recognizes that the process of understanding and responding to the

complex issue of employee health and welfare will be a continual process of

learning from experts and company best practices. The EICC is committed to

understand how an industry association such as ours may support its members

and best contribute to sustainable change on this issue.

The panel included experts from academia and employee assistance organizations:

Dr. Hou Lingling, Associate Professor and Vice-Director of the Social Security Institute at

Shenzhen University

Mr. Ji Feng, co-founder of the Shenzhen Industrial Forum, which supports migrant

workers and works to improve labor relations in the Shenzhen area

Dr. Liu Kaiming, Director of the Institute of Contemporary Observation (ICO) in Shenzhen

Mr. Peter Zhou, researcher and accreditation auditor of Better Factory Certification (a

private consulting company)

Ms. So Sheung So, Chief Executive of the Labor and Education Service Network (LESN)

Mr. Yu Chuntao, Director of Labor Relations at the Human Resources and Social Security

Department of Guangdong Province


Year in Review


__________________ This is the EICC

________ Issue-Specific Disucssions




CAPABILITY BUILDING The EICC understands that monitoring against its Code of Conduct alone

will not enable the long-term improvements needed for social and

environmental responsibility in the industry. Therefore, the EICC, in

collaboration with GeSI, is committed to investing in building awareness,

sharing knowledge, and developing the skills of its members, suppliers,

and workers.

The EICC also believes that by collaborating with our stakeholders, we are better

able to understand and address the most critical issues in our supply chain.

Therefore, the EICC and GeSI have committed to working with key NGOs,

customers, suppliers, consumers, and investors in delivering these investments

in capability building and to build more sustainability in the industry .

Progress in 2010

In 2010, the EICC and GeSI continued to develop and invest in our capability-

building strategy, making progress on key areas. Together, we:

Developed Health and Safety Training. The EICC and GeSI worked

closely with STR Responsible Sourcing, a global provider of corporate

responsibility auditing and consulting services, on a course targeting

facility management in a format that allows them to make improvements

within their own company workplace regarding health and safety issues.

The training employs a “train-the-trainer” approach to allow participants

to share their knowledge with their own companies and with their

suppliers. A pilot of the training materials was conducted in Shanghai in

November 2010 and attracted 62 participants representing approximately

40 companies. The EICC and GeSI received very positive feedback that

the training increased their knowledge and skills related to health and

safety topics.

Began development of the Worker-Management Communications

training in collaboration with the Fair Labor Association (FLA) and

INFACT Global Solutions, a China-based CSR consultancy. In addition,

the International Labour Organization (ILO) was an advisor during the

training development process, giving valuable insight into key issues and

topics for inclusion in the program’s materials. Representatives from

SOMO, the International Metalworkers’ Foundation, and the

GoodElectronics Network also provided valuable feedback through

stakeholder calls.

Drafted the KPI and Incentives Resource Guide to understand best

practices in measuring and reporting social and environmental

performance in the supply chain. Nineteen EICC and GeSI members

http://www.ilo.org/

http://somo.nl/

http://www.imfmetal.org/

http://goodelectronics.org/

, 24


CAPABILITY BUILDING

provided input in the benchmarking project, and interviews were

conducted with selected companies. The draft report was completed at

the end of 2010 and is currently in review.

Hosted two Energy Efficiency Trainings for suppliers, focused on how

to use energy audit tools at the factory level and identify actions for

reducing energy use. One session was held in Santa Clara, California (in

English), and one in Shenzhen, China (in Chinese).

Impact

Measuring the impact of the EICC and GeSI capability-building efforts continues

to be a challenge. In an attempt to assess the reach and impact of the training

developed, the EICC has started to track their use through an annual member

survey and through tracking the number of downloaded tools. However, it should

be noted that members also have access to trainings through a common platform

that we are not able to track; therefore, numbers of members using the tools are

likely to be under-reported.

76 percent of member survey respondents offer EICC training to either

company employees or suppliers. Procurement employees are most

commonly receiving ongoing training in supplier corporate social

responsibility.

88 percent of respondents offer training to employees on the EICC Code

or supply chain responsibility. The most common EICC topic offered

during employee orientation is the EICC Code, followed by information

on EICC membership and EICC tools.

57 percent of respondents provided training to suppliers; this represents

2,537 of respondents’ major suppliers (42 percent).

The e-Learning modules developed and launched in 2010 were utilized

by members and suppliers: 424 users from 56 companies downloaded

the e-Learning modules in English and Chinese. E-Learning modules are

online training programs that members and suppliers can either use on

the hosted website or download to an internal learning management

system.

Looking Ahead

The collaboration between the EICC and GeSI brings broader and expanded

opportunities for capability building beyond our individual organizations and

supply chains. Sharing tools and resources between the EICC and GeSI has

been an effective way to increase the tools we have been able to develop and

make available. While the aim is to offer trainings at every level on key issues,

the EICC must balance the needs of its members and the resources available to

deliver quality and meaningful training.

We will continue this collaborative model to address areas of key concern for the

industry. When looking ahead into 2011, we aim to:

CASE STUDY ___________________

Download the case study about creating the Health and Safety Training, featuring the Eastman Kodak Company!

______________________

http://eicc.info/documents/Kodak_CSFinal_09_2011.pdf







, 25


CAPABILITY BUILDING

Launch the Health and Safety and Worker-Management Communication

training programs by engaging members in the topics and by providing

additional face-to-face regionally-based trainings.

Release the KPI and Incentives Resource Guide across both

memberships in summer 2011.

Review the impact and strategic themes for EICC and GeSI capability

building efforts. For 2011, we will focus on these areas, and strive to

answer the following questions:

Continue successful collaboration: How can the EICC and GeSI facilitate

an exchange of best practice sharing between the two organizations’

members and suppliers? How can we improve the resources provided to

our members, and how can the resources be leveraged by other

organizations in other industries?

Increase integration: How can we better understand how our members

are deploying the tools we are providing? How will we develop trainings

that meet the needs of our service-oriented members? How can we

support the implementation of these trainings with members and their

suppliers?

Improve accountability: Impact and measurement will continue to be an

important area of development. How do we measure ourselves? How do

we know our trainings are helping companies improve compliance to the

Code? How do we move beyond simple statistics to measure the impact

of our capability-building efforts? We have started down a path of

including accountability and transparency into what we do; we now ask

for participant feedback via surveys in each of our trainings, and plan to

use that data to inform improvements in our training offerings. We look to

continue in these efforts.


Year in Review


__________________ This is the EICC





ENVIRONMENTAL

SUSTAINABILITY

The EICC recognizes that the manufacture, transport, distribution, and use

of electronics products contributes to global greenhouse gas (GHG)

emissions; as the demand for electronics grows, so do the risks and costs

associated with emissions, and expanding the industry’s environmental

footprint.

As a first step in 2008, the EICC launched the Carbon Reporting System with the

aim to better understand how the electronics supply chain contributes to GHG

emissions and how it can advance responsible practices. This program has

evolved to enable streamlined data gathering on energy usage, collaborative

opportunities to identify and address the most impactful environmental issues,

and share knowledge/best practices across an industry

Progress in 2010

In 2010, the EICC introduced a simplified and streamlined version of the Carbon

Reporting System (“System”) by building on the successes and lessons learned

from the 2009 pilot. The 2010 System continued to increase supplier awareness

of how to measure greenhouse gas emissions, increase customer visibility into

their supplier’s emissions, and reduce reporting redundancy by letting suppliers

share their data with multiple customers simultaneously.

In addition, we improved the System to better serve both customers and

suppliers. First, we provided options for submitting the data from the Carbon

Disclosure Project (CDP) or the U.S. EPA Climate Leaders Program, in lieu of the

EICC tool, to reduce duplication of efforts for members and to increase member

participation. We maintained the free use of the tool for EICC members and also

made it available, with guidance documentation, in Chinese, Spanish, and

Japanese. The tool is available to non-members for a fee. We also provided two

training sessions on how to use the Carbon Reporting tool. Language barriers

and appropriate capability building for suppliers remain our biggest challenge that

we are continually trying to improve upon.

In 2010, we also witnessed a significant focus by NGOs, such as the Institute of

Public & Environmental Affairs (IPE), in partnership with the Green Choice

Alliance, on water pollution in China from the manufacturing of electronics

products. This prompted the EICC to prioritize research on the issue one year

ahead of schedule. The EICC collaborated with BSR to research the issues

taking place in China’s electronic manufacturing sector to better understand the

potential impact, and to provide resources and recommendations for EICC

members to consider addressing in their respective supply chains. Companies

who participated received individualized reports for their suppliers, as matched

against a database of companies alleged to be non-compliant with Chinese water

regulations.

CASE STUDY ___________________

.

Download the case study about encouraging an environmental focus in the supply chain, featuring Applied Materials!

______________________

http://www.eicc.info/documents/EICC_CarbonReportingSystem_091911FINAL.pdf

http://www.eicc.info/documents/EICC_CarbonReportingSystem_091911FINAL.pdf

http://www.ipe.org.cn/En/alliance/gca.aspx

http://www.ipe.org.cn/En/alliance/gca.aspx


http://eicc.info/documents/AppliedMaterials_CSFinal_09_2011.pdf







27


ENVIRONMENTAL SUSTAINABILITY

Impact

As a result of the Carbon Reporting System improvements, in 2010, 27

EICC companies participated as “customers” in the System.

Participation in the System rose 125 percent. This substantial

increase translated to a 306 percent increase in the number of

suppliers nominated to participate in the System, thereby

reducing reporting duplication, building on best practices, and

sharing resources across the industry, all benefits to members.

89 suppliers tracked and reported their carbon emissions for the

first time.

Suppliers shared more data with their customers, on average

sharing emissions data with 4.3 customers compared to 3.3

customers in 2009.

The EICC increased the identification and understanding of water

pollution risks in the electronics supply chain in China and, utilizing

research from IPE’s pollution map database, provided specific

information on suppliers in the EICC member company supply chain.

The research demonstrated the interconnected nature of the

electronics supply chain and the possibility for systemic issues causing

negative environmental impact.

Member survey respondents indicated that they track metrics more

often for their own operations than of their suppliers. Members may

use the Carbon Reporting System to assist in the tracking of their

supply chain in these areas.

Tracking Metrics Own Operations Supplier Operations

Energy 92% 52%

Solid waste 80% 26%

Hazardous waste 79% 23%

Water usage 82% 32%

28


ENVIRONMENTAL SUSTAINABILITY

Looking Ahead

The EICC is committed to increasing the overall value of the Carbon Reporting

System for customers and suppliers. There is considerable opportunity for EICC

members to advance best practices on energy efficiency and to work collectively

toward environmental improvements in sustainability. Thus, the EICC will work to

continuously improve the System and the value of this critical tool and reporting

process by:

Improving the quality of data so that we may better understand what it

means for the industry

Streamlining the supplier invitation process to reduce the occurrence of

multiple invitations being sent to the same supplier

Providing additional training opportunities for suppliers in multiple

languages and time zones

Increasing supplier engagement during the data-collection phase

Merging questions on water footprint into the same questionnaire, so

there is only one request and one questionnaire to be completed in 2011

Investigating tools for communicating best practices among members

and the supply chain


Year in Review


__________________ This is the EICC





MINERAL EXTRACTION The EICC and GeSI are committed to improving conditions in the

electronics supply chain and believe that mining activities that fuel conflict

are unacceptable.

Since starting its focus on issues pertaining to mineral extraction in 2008, the

EICC and GeSI have worked to identify key challenges to successfully track and

monitor minerals and materials throughout the electronics supply chain. While

tracing the origin of individual materials used in products is an inherently

challenging aspect of supply chain management, opening pathways for

communication between tiers on the supply chain and increasing accountability

can help overcome these challenges. In 2010, the EICC and GeSI made major

contributions to improve the programs and practices for mineral traceability within

the industry, and we are working to assure conflict-free sourcing for the industry.

Progress in 2010

Launched its Conflict-Free Smelter (CFS) program for tantalum smelters

(see below, Special Focus: Conflict-Free Smelter Program). Having

identified smelters as a supply chain “pinch point” for conversion from

raw ore and recycled materials into refined metal between mining

operations and the electronics industry, the CFS allows smelter

companies to demonstrate that they do not source metals that directly or

indirectly support illegal armed groups. The CFS program is a global

opportunity that increases supply chain accountability.

Began development of the Conflict Minerals Reporting Template for

supply chain due diligence. Managing information among various tiers of

the electronics supply chain has historically been an obstacle to due

diligence; however, the new Conflict Minerals Reporting Template will

allow suppliers and their customers to manage and track smelter

information through the downstream supply chain of a product. The

template sets common criteria for supply chain reporting, based on

Dodd-Frank requirements.5 When complete, this tool will enable EICC

and GeSI member companies to more easily identify detailed smelter

information related to the products procured, as well as be prepared to

report according to the Dodd-Frank requirements.

Supported a responsible sourcing pilot program for tin in the Democratic

Republic of Congo, through its collaboration with the ITRI Tin Supply

Chain Initiative (iTSCi). The iTSCi pilot helps verify the potential to

procure responsibly sourced tin and tantalum from within the Great

Lakes Region of Central Africa.

5 Tin, tantalum, tungsten, and their ores or mineral derivatives, and gold sources from the DRC and nine adjoining countries that make up the Great Lakes Region are defined as the “conflict minerals,” per section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

CASE STUDY ___________________

Download the case study about responsible sourcing, conflict minerals, and the supply chain, featuring Intel Corporation!

______________________

http://www.conflictfreesmelter.org/index.htm


http://www.itri.co.uk/index.php?option=com_zoo&view=frontpage&app_id=4&Itemid=60

http://www.itri.co.uk/index.php?option=com_zoo&view=frontpage&app_id=4&Itemid=60

http://eicc.info/documents/Intel_CSFinal_09_2011.pdf







30


MINERAL EXTRACTION

Achieved broader stakeholder engagement through three supply

chain workshops. By hosting these workshops and other engagements,

the EICC and GeSI enabled more substantive dialogue between

stakeholders at all levels of the electronics supply chain, including

companies, governments, and NGOs focused on reducing consumption

of minerals supporting armed conflict in the Democratic Republic of

Congo. Establishing forums for more open information exchange has

enabled stakeholders to identify common objectives, paving the way for

future collaboration.

Joined with other stakeholders to launch the GeSI-EICC In-Region

Sourcing (GEIRS), a collaborative partnership between the EICC, GeSI,

NGOs, and on-the-ground stakeholders. GEIRS meets monthly to

facilitate discussion and actions around responsible in-region sourcing.

Participated in the development of the OECD Due Diligence Guidance

for Responsible Supply Chains of Minerals from Conflict-Affected and

High-Risk Areas. The Due Diligence Guidance provides management

recommendations for responsible supply chains of minerals to help

companies respect human rights and avoid contributing to conflict

through their mineral or metal purchasing decisions and practices. The

Due Diligence Guidance is for use by any company potentially sourcing

minerals or metals from conflict-affected and high-risk areas.

Looking Ahead

The EICC and GeSI anticipate that CFS assessments for tin, tungsten, and gold

will begin in 2011. More information on the status of the program can be found at

www.conflictfreesmelter.org. The Conflict Minerals Reporting Template will also

be launched in 2011, providing companies a common tool for obtaining and

tracking their due diligence information.

The EICC and GeSI also plan to continue hosting extractives supply chain

workshops, both in the United States and Europe. Those sessions will include

information about the CFS program and assessments, the Conflict Minerals

Reporting Template, in-region certification and tracking activities, and those of

the regional governments.

Increasing transparency within the electronics supply chain is a key strategy for

ensuring responsible sourcing of extracted minerals. As benchmarks for best

practices in the extractives industry continue to expand and develop, the EICC

and GeSI will foster the Conflict-Free Smelter program and the Common

Reporting Template for all industries—not just the electronics industry—to build

the capacity of companies to the next level of maturity.

______________________

243 attendees participated in the three extractives supply chain workshops, representing EICC and GeSI members, governments, industry association representatives, other non-member companies, and NGOs. ______________________

______________________

42 EICC and GeSI member companies participate in Extractives working group calls, including four non-member companies.

______________________

http://www.oecd.org/document/36/0,3746,en_2649_34889_44307940_1_1_1_1,00.html




31


MINERAL EXTRACTION

SPECIAL FOCUS: Conflict-Free Smelter Program (CFS)

The CFS is a voluntary program in which an independent third party assesses a smelter’s procurement activities and determines if the smelter demonstrates that the minerals processed in their facilities originated from conflict-free sources. The program aims to enable companies to source conflict-free minerals, and prevent—to the best of their ability—the introduction of conflict minerals into their supply chain. The EICC and GeSI developed this program in order to have a credible system for companies to determine the mine-level source of materials in their supply chains. Companies that want to source responsibly will be able to use the results of the smelter assessment in their own purchasing decisions. While the CFS is a voluntary program, the EICC and GeSI anticipate that a significant portion of the world’s smelters will choose to join the CFS program, and we welcome the participation of all smelters.

The EICC and GeSI members were the primary developers of the CFS program. However, through the program the EICC and GeSI engaged smelters—many of whom are in China, Malaysia, Russia, United States, and Indonesia—along with representatives from the U.S. government, NGOs, members of the tin and tantalum supply chains, component manufacturers, and on-the-ground stakeholders in the development of the program. These organizations provided input on many aspects of the program, and we continue to rely on their input to ensure the program is credible and efficient.

In 2010, the EICC and GeSI launched the program, starting with tantalum smelters. The learnings derived from the tantalum assessments will inform the development of the protocols for tin, tungsten, and gold.

While there were many challenges during the development and pilot processes during 2010, we believe that working with stakeholders is the only way to build a sustainable solution to increase transparency and develop processes that ensure conflict-free sourcing. During the process of developing the CFS program, we faced challenges harmonizing complex, multi-stakeholder interests and gaining agreement on critical program areas. To address this, we reviewed the CFS program and assessment protocols with several stakeholders before finalizing it.

Another pressing challenge that we continue to face as an industry is the difficulty of having true transparency down to the smelter name in such a complex supply chain. We are addressing this challenge through the development of the Common Due Diligence Reporting Template. Finally, we anticipate continued challenges in establishing a credible and sustainable in-regional sourcing scheme for minerals coming from the Democratic Republic of Congo, and look to continue to help with the efforts to make this possible.

2011 Update: The EICC and GeSI announced the first publication of conflict-free smelters that are compliant with the CFS program. The list features tantalum smelters that have passed the program requirements for “conflict-free.” If a smelter is not on the list, it has either not undergone a CFS assessment, or is not in compliance with the CFS protocol. Following tantalum, the EICC and GeSI will launch assessments for conflict-free smelters of tin, tungsten, and gold. The EICC and GeSI will regularly update the Conflict-Free Smelter website as more smelters successfully move through the program.

Find more information about the Conflict-Free Smelter program at www.conflictfreesmelter.org. Registration required.

http://eicc.info/documents/Conflict-FreeSmelterFAQ.pdf




Year in Review


__________________ This is the EICC


_________ Stakeholder Engagement



STAKEHOLDER ENGAGEMENT The EICC solicits external feedback from its stakeholders to inform our

projects, our approach, and to hear perspectives on how we can contribute

to social and environmental responsibility in the electronics industry. Since

2004, the EICC membership has grown to include a more diverse

population of companies; with this diversity comes a related stakeholder

universe that is quite complex.

Over the last six years, the EICC has expanded how it communicates and

engages with stakeholders. In the early days of the EICC, stakeholder

collaboration was focused on the Code of Conduct development and review

process. Now, the EICC collaborates with stakeholders on numerous areas of the

EICC’s work, including the content and design of some of our tools and

processes—from the extractives work to the tools we develop for capability

building. The EICC also engages stakeholders on specific topics in the industry

and to review the Annual Report itself. While we continue to improve the way we

engage and communicate with stakeholders, the EICC’s broader engagement

approach with stakeholders reflects the breadth and complexity for our

organization. It is the candid feedback from stakeholders—challenging the

position of the EICC—that results in deeper thought, more impactful actions, and

better support outside the organization.

In 2009, we began approaching our engagement more systematically by creating

“road maps.” The road maps help us to systematize our engagement activities

and make them more strategic. Our learning from this over the past year is that

sometimes this has helped us achieve progress in planned areas, and

sometimes we must reprioritize when and how to engage due to arising issues.

33


STAKEHOLDER ENGAGEMENT

In 2010, EICC members faced two priority issues that were unanticipated and not

part of the year’s road map. First, the industry faced news of the tragic suicides

that took place in China, and the EICC prioritized engagement with experts and

relevant stakeholders on worker health and welfare. As discussed earlier, the

EICC launched the Employee Health and Welfare Task Force to provide

recommendations on actions the EICC could take to address issues in these

areas. In addition, the U.S. Congress passed Dodd-Frank legislation that brought

with it disclosure requirements for companies related to conflict minerals. This

ushered in a new importance to the EICC’s Conflict-Free Smelter program: to

prioritize engagement with stakeholders on the protocols and program

development for conflict-free sourcing.

These priorities are reflected in the table below. However, this also meant that

some planned engagement processes were not delivered as we had hoped.

Therefore, we continue aiming to improve our engagement process with

stakeholders and adjust our approach based on our continued learning.

Progress in 2010

Road Map Planning and Progress

Road Map Item Engagement What We Did 2011 Road Map Target

Education Sessions

1. Precarious Work

Training session with members and stakeholders on the topic

Together explored implications to the Code and operations

2. Regional Engagement: Guadalajara, Jalisco, Mexico

Discussed temporary workers and freedom of association, specific to Mexico

Discussed resolving worker grievances in the region and methods of certifying labor agencies

Developed list of recommended actions

Meet with CEREAL on its annual report outlining critical issues in electronics companies/sector in Mexico

Engage in-region stakeholders in projects resulting from Guadalajara stakeholder session

3. Regional Issue: China

Engaged experts to educate members on worker welfare topics, including root cause analysis of the 2010 worker suicides

Meet with Ma Jun (IPE) on water issues in China

Code Review Hold ad hoc discussions with stakeholders on the Code

Engage stakeholders in the 2011-2012 Code Revision Process

34


STAKEHOLDER ENGAGEMENT

Looking Ahead

The EICC will continue to build strong relationships with its internal and external

stakeholders through open communication and strategic collaboration. We are

collaborating with stakeholders in 2011 on the targeted activities outlined in our

stakeholder engagement road map. Additionally, we will host targeted

educational sessions with stakeholders to inform members and stakeholders on

key issues in the global electronics supply chain.

Road Map Planning and Progress

Road Map Item Engagement What We Did 2011 Road Map Target

Working Group Collaboration

Supplier Training

Facilitated Energy Efficiency training in Santa Clara, CA, and Shenzhen, China

Conducted Carbon Reporting System training for suppliers

Conduct Carbon Reporting System training for suppliers with multiple language options

Conflict-Free Smelter Program

Engaged Global Witness and The Enough Project during the development of the Conflict-Free Smelter (CFS) program

Engaged OECD, the Responsible Sourcing Network (a project of As You Sow), and other stakeholders in reviews

Engage stakeholders in review of CFS protocols for tin, tungsten, and gold.

Continue to hold supply chain workshops to inform and educate members and stakeholders on issues and initiatives surrounding conflict minerals

Worker-Management Communication Program (WMCP)

Engaged FLA and IMPACT to develop training content

Engaged the ILO to provide advice on the development process, giving valuable insight into key issues and topics

Engaged SOMO, the GoodElectronics Network, and the International Metalworkers’ Foundation in WMCP review calls

Finalize content on WMCP Conduct final stakeholder

reviews

Employee Health and Welfare

Engaged experts to inform the research of the task force on root causes of worker welfare issues in China

Collaborate with other organizations, such as the Dutch Sustainable Trade Initiative (IDH) to deliver greater impact for the industry

Annual Report One-on-one discussions with NGO stakeholders

Discussed the outline and draft report with stakeholders; feedback informed the content of the report

Engage stakeholders in review of outline and draft copy of the 2010 Annual Report in order to inform content and presentation of material

Other Cross-industry Collaboration

Continued to develop key collaborations with other organizations to increase our learning and impact. We have Memorandums of Understanding (MOUs) with GeSI, as well as the Automotive Industry Action Group

Develop MOUs with other key organizations, both within and external to the electronics industry


Year in Review


__________________ This is the EICC



_________ Acronyms and Definitions


ACRONYMS AND DEFINITIONS

ACRONYMS

CFS CSR Dodd-Frank DRC E-TASC EICC

®

EICC®-On

FLA GeSI GEIRS IDH ILO IPE ITRI iTSCi KPI NGO OECD OEM RA1 SAQ SEC VAP

Conflict-Free Smelter program corporate social responsibility Dodd-Frank Wall Street Reform and Consumer Protection Act Democratic Republic of Congo Electronic Tool for Accountable Supply Chains Electronic Industry Citizenship Coalition, Incorporated® EICC technology platform Fair Labor Association Global e-Sustainability Initiative Global e-Sustainability Initiative (GeSI) and Electronic Industry Citizenship Coalition (EICC) In-Region Stakeholder Pane Initiatief Duurzame Handel, the Dutch Sustainable Trade Initiative International Labour Organization Institute of Public & Environmental Affairs tin industry association ITRI Tin Supply Chain Initiative key performance indicator nongovernmental organization Organisation for Economic Co-operation and Development original equipment manufacturer Risk Assessment 1 Self-Assessment Questionnaire U.S. Securities and Exchange Commission Validated Audit Process

DEFINITIONS

auditee Facility or campus undergoing an audit; may be a member facility or supplier facility

e-Learning Online training programs that members and suppliers can either use on the hosted website or by downloading to an internal learning management system.

high-risk facility A member facility, supplier, or supplier facility that scores 65 percent or less on a total of at least five sections of an EICC risk assessment tool (e.g. RA1, SAQ), or scores similarly on an equivalent company risk assessment tool. The presence of any priority non-conformances also indicates an immediate high-risk status.

member facility A member’s own facilities, or a supplier that is ranked in member’s top 80 percent of direct suppliers by spending and contracted to provide service or material input for member’s finished goods or services, or under the control of the member (e.g., member requires purchasing from the supplier), even if services or materials are not directly conveyed to the member

Membership Compliance Program

Member-ratified program defining membership requirements and implication of member non-attainment of membership requirements

membership requirements

Defined requirements that Full and Applicant members must meet to be considered in compliance with membership requirements


1155 15th

Street, Suite 500

Washington, DC 20005

Phone: 202-962-0167 www.eicc.info

http://www.eicc.info/

Documents

DRIVING CHANGE FOR A SUSTAINABLE€¦ · DRIVING CHANGE FOR A SUSTAINABLE ... Created Employee Health and Welfare Task Force Clarified roles of task forces and working groups for