Can Building a Computer Be "No Sweat"?(A)
I grew up in Silicon Valley during the high tech boom of the late 70s and early 80s. That brought with it traffic and suburban sprawl that displaced almost all of Santa Clara Valley’s beautiful orchards, but it also brought tremendous wealth to high tech workers. Now many of the same companies that grew up almost in my backyard have spread around the globe. As they have, human rights organizations and socially responsible investors, including Trillium Asset Management, are working to ensure that the global boom in high tech manufacturing helps bring prosperity to workers around the world and not just to those in the corporate headquarters near my childhood home.
If you ask yourself where computers come from, you’re likely to think of sunny Silicon Valley, or the cow fields of South Dakota (at least when Gateway was advertising a lot), or the suburbs of Austin, Texas, now that Dell has surged ahead. In fact, in this era of outsourced overseas production, over a third of computers and high tech equipment is built in developing countries, a trend that is only accelerating. Early last year, the Catholic Agency for Overseas Development (CAFOD), a U.K.-based human rights organization, sounded a wake-up call for the high tech industry, its consumers, and investors, with a report on working conditions in factories producing equipment for many of the biggest U.S. computer manufacturers. The CAFOD report, based on interviews with workers in computer factories in China, Mexico, and Thailand, painted a picture of workers laboring in unsafe working conditions, facing compulsory overtime and degrading treatment, often for low pay that falls even below the legal minimum wage required in those countries.
To their credit, a number of leading high tech companies responded to the allegations by developing a common code of conduct to protect workers in their factories and factories of overseas companies that now manufacture many of their products or components. In October 2004, Hewlett-Packard, Dell, and IBM released a joint Electronics Industry Code of Conduct, which Cisco, Intel, and Microsoft quickly endorsed as well. Many of these companies already had their own codes of conduct, but the joint code sends a stronger signal to suppliers with a harmonized approach to addressing labor and employment practices, health and safety, ethics and protection of the environment. These companies are now working together to jointly implement the code of conduct, developing common tools for monitoring suppliers, identifying particularly risky suppliers, and providing trainings and resources to improve working conditions in their factories. CAFOD has offered qualified support for the new code, while noting that it should go farther to incorporate international standards for freedom of association that would give workers the opportunity to form unions and bargain collectively for their rights.
Trillium Asset Management invests in many of the electronics companies that have adopted the new code of conduct, and we have contacted several of them to offer our thanks and also to press for strong and effective implementation. We’re also encouraging several of our other holdings in the technology sector, including Altera, Analog Devices, and Semtech to adopt the code and have begun discussions with them to understand how they are currently managing these issues with their own suppliers. That’s of particular importance with Altera and Semtech, computer chipmakers that specialize in the design and marketing of high-end computer chips, but don’t own or operate any factories themselves and instead rely on companies overseas for all their production. Several of these companies are now actively considering endorsing the joint code of conduct and we hope to report more results from our engagement with them in the months ahead.