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Is a truly ethical smartphone possible?

How Was Your Smartphone Made? Nobody Really Knows
A startup called Fairphone pulls back the curtain on an electronics supply chain plagued by forced labor and armed militias. Is a truly ethical smartphone possible?

Most of us don’t know how to open up our smartphones, much less what’s inside. Believe it or not, even phone makers can’t account for the origins of every ingredient.

Behind the glossy surface are dozens of minerals, processed in hundreds of factories, touched by thousands of hands. The more I ask about my phone’s roots in African mines and Asian assembly lines, the more uncomfortable I become. My phone might have supported forced labor or warlords.

That’s what I’m starting to learn from a product called Fairphone, a Dutch electronics startup’s attempt at making an “ethical” smartphone. The $580 Android-powered Fairphone 2 has responsibly sourced materials and labor, and a design that makes it both consumer and earth friendly. It isn’t for everybody, but it can teach us all the real costs of the little black boxes in our pockets.

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There isn’t a single clear villain. There are too many people involved, a global supply chain full of complicated relationships and trade secrets. For every Apple or Samsung, there are thousands of companies under less scrutiny from regulators and journalists and all getting rich in the smartphone boom.

Take gold, which smartphones need for connectors. It fuels violent rebels in the Congo, and it is now a more valuable illegal export than cocaine in Colombia and Peru. Slavery is part of the supply chain: Forced workers make up a third of the migrants in Malaysia’s electronics industry, a U.S.-funded 2014 survey found.

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For consumers, there’s more than a guilty conscience at stake. Most phones are designed to look good, but they cost a lot to repair. And if you just want to upgrade your camera, you need to buy a whole new phone.

Fairphone’s purpose is to be open. To drive home the point, the phone’s translucent back cover lets you see the circuits inside.

Founder Bas van Abel and his colleagues create longer-lasting modular cellphone designs, source at fair-trade mines and look for new ways to work with factories in China. They post blogs and videos about their successes and failures at changing the way phones get made.

“We haven’t created the 100% fair phone,” Mr. van Abel told me. “We are showing through our own supply chain what’s wrong with the supply chain.”
Fairphone, which started in 2010 as an awareness campaign over conflict minerals, is “a model for what can be done,” says Shawn MacDonald, chief executive of labor consultancy Verité, which conducted the Malaysian labor study. “Obviously, they still have to show that it can work,” he adds.

Fairphone’s tiny scale, and some of its efforts, put it at a disadvantage in the marketplace. The Fairphone 2 costs almost as much as the iPhone 6s and Galaxy S7, but it isn’t as fast or as sleek. It is currently sold only in Europe. (It might come to the U.S. next year.)
I used the Fairphone 2 as my primary phone for a week and liked its rugged body and removable battery. But I missed those other phones’ fingerprint readers and superior cameras.

Still, as smartphone buyers, we can use Fairphone to tell the story of where smartphones come from.

What’s Inside?
It starts with materials. About 40 minerals go into a phone, but four in particular are precious and found in mines in war-torn regions—tin, tungsten, tantalum and gold. Starting last year, the Dodd-Frank Act has required public companies to disclose whether any of their products containing these minerals were funding militia groups in the Democratic Republic of Congo and surrounding areas. But Dodd-Frank doesn’t actually require minerals be conflict-free.
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Many companies have struggled with the disclosure requirement. Apple says 100% of its smelters and refiners are now subject to third-party audits, up from 44% in 2013. Samsung says third-party auditing of its mineral handlers will soon reach 90%.

Just because a firm is audited doesn’t make it automatically virtuous. Apple is investigating allegations of gold smuggling associated with armed groups while working with other industries to encourage responsible mining.

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A worker washed tungsten at the New Bugarama Mining Co. in Rwanda. Fairphone says it has sought out mines with better business practices to help spur healthier local economies.
A worker washed tungsten at the New Bugarama Mining Co. in Rwanda. Fairphone says it has sought out mines with better business practices to help spur healthier local economies.
Fairphone says it sought out mines in the DRC and Rwanda that have better business practices to help spur a healthier local economy. And it says it worked for months to become the first electronics company to bring fair-trade gold (from a mine in Peru) into the supply chain.

Who Made It?
Fairphone, too small to efficiently run its own factory, found a Singaporean manufacturer called Hi-P with a factory in Suzhou, China, willing to work with it. The approximately 100 workers on the Fairphone line aren’t paid more than others—up to 4,000 yuan ($600) a month—but Fairphone has a representative based at the factory most of the year to make sure workers aren’t taken advantage of. The startup is setting aside money in a “welfare fund” that workers could collectively decide how to spend.

On a recent Monday, employees at the Suzhou factory told my colleague they work 10-hour days, usually sitting down, snapping and screwing together about 600 phones. One woman repeatedly takes selfies to test the front-facing camera.

“The company is more humane,” said Hi-P employee Du Juan, 35 years old. They even host cake-eating competitions on birthdays, she said. Her biggest complaint is there aren’t enough choices in the cafeteria.

“If they were here working until nine, I would know,” said Mulan Mu, the Fairphone rep.

Still Fairphone hasn’t always been able to hold to its goal of a 60-hour workweek. It struggles to keep shady workforce brokers at bay and to accurately forecast demand, so that Hi-P doesn’t have to hire temporary workers. And some employees want to work more hours to earn overtime pay.

Thanks to recent anti-slavery laws in California and the U.K. requiring companies to disclose what they are doing to address the problem in their supply chains, consumers and investors are starting to get more insight into larger companies’ labor practices.

The nonprofit Know The Chain published a study in June rating electronics companies on how well they institute policies and practices to root out forced labor from suppliers. Apple came out near the top, and Samsung near the middle. Yet a leading Apple supplier, Foxconn, landed near the bottom because it discloses so little. Fairphone wasn’t rated.

“We hold ourselves and our suppliers to the highest standards,” said a Samsung spokeswoman. “We continuously assess and improve operations and facilities throughout our supply chain.”

A Foxconn spokeswoman said it has conducted its own audits of 448 suppliers and found “no severe breaches” of its code of conduct, including forced labor. The company said it would consider additional measures after reviewing the Know the Chain report.

How Long Will It Last?
Fairphone’s most radical idea is its design. It is a truly modular phone: You can peel off the back cover to reveal the removable battery and everything inside. Pinch two blue tabs, and you can slide (yes, slide) off its screen, exposing the camera, microphone and headphone plug—all of which can be removed with a few simple screws.

Modularity makes Fairphone thicker and a bit harder to manufacture, but much easier to repair. (It earned the highest-ever score from repair gurus at iFixit.) It also means owners could potentially upgrade individual modules—say, to a better camera—rather than buy a new phone, though Fairphone hasn’t yet sold a la carte upgrades.

“Our ambition is to sell fewer phones,” says Mr. van Abel—heresy in most of the industry.

It isn’t clear how Fairphone, a for-profit social enterprise, will make enough money to grow to a point of real influence. And if it does, will its solutions still matter? It might be able to source fair-trade gold for the 100,000 phones it has sold—but what happens when you make hundreds of millions? Are bigger companies better able to influence the supply chain?

Fairphone execs go out of their way to avoid criticizing or directly comparing themselves to Apple or Samsung. You can be certain those big companies care about labor and sustainability, too—and have lots of incentive to avoid risks. Apple hired former Environmental Protection Agency administrator Lisa Jackson to work on these issues. In many ways, Apple and Samsung are just catching their breath after a decade of explosive smartphone growth. They have to figure out how to balance these concerns with the priorities of customers and investors.

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What really makes Fairphone different is its marketing of radical transparency. For the first time, I’m thinking about what’s inside my phone, where it came from and who touched it before I did. If human concerns are the next hot smartphone feature, the first step is to make us care.

Source: WSJ

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