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Bachelor thesis

Sustainable and Responsible Public

Procurement of Mobile Phones in the

Netherlands

How sustainability and social responsibility concerns are integrated in the public procurement process of mobile phones

18-06-2018

Lieke Hevink (11003669)

E-mail: lieke.hevink@student.uva.nl

Phone: 0637444136

Supervisor: Dhr. dr. J.J.S. Merk

Second reader: Dhr. dr. N.P.C. Beerepoot University of Amsterdam

Faculty of Social and Behavioural Sciences

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Abstract

The production network of mobile phones is truly global, with production and consumption activities occurring in many different countries worldwide. In the production stages of mobile phones several problematic activities occur, such as conflict and bad working conditions.

A specific form of consumption that can have a big influence in addressing these issues is public procurement, the purchasing of products by the public sector. Due to the large scale and long-term nature of contracts, these organisations can market for companies that consider sustainability and social responsibility through sustainable public procurement. The aim of this study is to research how the Dutch public sector integrates sustainability and social responsibility concerns in the public procurement of mobile phones. In total, eight organisations have been interviewed regarding their procurement process of mobile phones.

Three different policy types regarding public procurement have been recognized in this study; the Choose Your Own Device policy, the Bring Your Own Device policy, and the policy where one type of phone is procured. Sustainable public procurement of mobile phones is implemented in varying ways and to varying extents. Of the eight organisations, three are affiliated with Electronics Watch, two currently offer Fairphones, and one currently offers refurbished phones. Three of the organisations do not display any of the indicators. As SPP is not mandatory to apply in the Netherlands, organisations can decide for themselves whether they would like to invest time, money and effort in procuring sustainably.

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Table of contents

1. Introduction...3

2. Theoretical framework...7

2.1 The geography of mobile phones...7

2.2 Public procurement of mobile phones...10

2.3 The models of Fairphone and Electronics Watch...11

3. Research design...12

3.1 Research methods...12

3.2 Positionality and ethics...14

4. Results...15

4.1 The organisation of public procurement in the Netherlands...15

4.2 Sustainable public procurement of mobile phones...18

4.3 Implementation of SPP in Dutch organisations...21

5. Conclusion...25

6. Discussion...27

6.1 Recommendations...27

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1. Introduction

Within the last decades, mobile phones have become an essential part of our everyday lives. From around 300 million mobile phone subscriptions in 1998 to approximately 7.5 billion in 2016, the amount of mobile phone users has increased drastically globally (WorldBank, 2018). In many countries, the penetration rate exceeds 100%, meaning that the amount of mobile phone subscriptions is larger than the population size (Kımıloğlu et al, 2010). Along with this increasing demand, the mobile phone industry has been innovating at a fast rate. This is enforced by the fast-paced development of technology and by intense competition among mobile phone companies. This competition urges companies to better understand their consumers and offer unique and desired products, in order to take advantage of marketing opportunities.

Production and assembly activities in the mobile phone industry have mostly been outsourced to separate companies abroad, also known as contract manufacturers (Hess & Coe, 2006). Outsourcing was not a formally recognized business strategy until 1989 (Mullin, 1996). Similarly, the mobile phone industry is relatively young. Both the business strategy of outsourcing and the mobile phone industry started growing rapidly around the same time. Electronic manufacturing services (EMS) firms took over additional functions such as material sourcing and product development (Hess & Coe, 2006). These firms are often located in low-wage countries such as China. Practically all mobile phone companies have outsourced part or all of their manufacturing to EMS firms. Especially the processes in the production stages have been outsourced, such as mining and assembly of products.

Within the geographically diffuse stages of the mobile phone production network, several practices in production and consumption occur that have been subject to concern by academia and NGOs. In production stages, the mining of minerals as well as labour conditions in assembly factories have been criticised. The activities subject to concern in consumption stages are consumption patterns and after-use and recycling processes. These events will be explained in more detail in the following section.

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Before the phones can be assembled, the raw minerals are mined. Approximately forty minerals comprise the hundreds of small parts in a phone, including tin, tungsten, tantalum and gold (Wernink & Strahl, 2014). The majority of minerals that are essential in phones originate from developing countries where these resources are critical to the local economy (ibid.). In absence of a strong state, mining activities can result in conflict, where local populations are treated poorly and earn low wages (Nathan & Sarkar, 2010). This notion of conflict minerals is merely the first step in the global production network. As the minerals are traded, exported and refined, it becomes nearly impossible to trace back where they originate from (Prendergast & Lezhnev, 2009). The refining stage is an important link in the traceability of minerals, as all minerals from varying origins are mixed together at this stage (ibid.). When there is no documentation of minerals’ origin, it remains unclear to companies and consumers whether their phones contain conflict minerals or not. These processes and events occurring at the very first step of the global production network, accumulate to a degree of intransparency. Later, all minerals and materials are assembled into mobile phones. At this stage, which takes place in EMS firms’ assembly factories, several problematic matters have been recognized, such as bad working conditions, low wages and no worker representation (Barrientos et al., 2011).

Once the phones are assembled and are part of the spaces of consumption, a particular linear economy model of ‘take-make-dispose’ can be recognized (Page, 2015). Leading phone companies are introducing new products at a fast rate with the aim of selling as many units as possible. As a result, consumers are not necessarily emotionally attached to the physical phone, but rather to what the phone can do. This makes it easy to discard used phones and purchase new ones. Although profitable, this is not a sustainable business model. This is related to the notion of planned obsolescence, which can be defined as “the outcome of a deliberate decision by suppliers that a product should no longer be functional or desirable after a predetermined period” (Weiser, 2016 as cited in Cooper, 2010, p. 4). Apple, for instance, has admitted to deliberately slowing down older iPhones (Gibbs, 2017). This is done with a software feature that slows down batteries that are older or low charged. This proves that a product-based business model is

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dominant over a service-based one (Page, 2015). The introduction of more new products and an increasing amount of mobile phone users results in a growing, already enormous, amount of e-waste. This is especially dangerous in developing countries, where used or broken electronics are exported to. Primitive e-waste recycling can expose people to dangerous substances and heavy metals inside the waste (Wernink & Strahl, 2014).

In addressing these issues that occur throughout the mobile phone production network, the state is looked at first. Protecting human rights and ensuring effective remedies is part of the state’s duty. This is taken up in the United Nations Guiding Principles (UN, 2014). There are, however, several doubts to the impact that the state can exercise on these issues. Policy controversies and issues in the production network often transcend state or national levels (Baek, 2010). Moreover, in the increasingly globalized world that exists today, the effectiveness of governments’ ability to solve certain issues is reduced. One issue is not necessarily related to one state; certain problems become other states’ problems as well.

Multiple initiatives and NGOs have been set up to address and potentially solve certain issues in the mobile phone production network in an alternative way. Organisations such as Electronics Watch and The Good Electronics Network work on improving and addressing issues in the electronics supply chain and intend to make it more transparent (Electronics Watch, 2018; Good Electronics, 2018). Responsible sourcing of minerals from conflict regions is addressed through projects such as Solutions for Hope which has created conflict-free initiatives (Solutions Network, 2018).

Nevertheless, researchers stress that consumers ultimately possess the power in terms of being able to influence the industry with their purchasing decisions (Page, 2015; Wernink & Strahl, 2014). The industry might not change unless it is realized that consumers desire a change in current practices (Page, 2015). However, this might lead to some resistance by not only the companies, but also by the consumers themselves. Even though consumers generally choose good over bad, the sheer size of the change they would have to make is at the root of this contradiction. Nevertheless, a shift in the spaces of consumption might have the power to influence companies and industry practices. This is related to the

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changing effectiveness of the state in addressing these issues; consumers’ targets have changed from trying to influence political leaders and governments, to trying to influence markets. When people are deliberately consuming politically, they are either boycotting or buycotting certain products or companies. Boycotts punish companies for unacceptable behaviour, whereas buycotts reward companies for desirable behaviour (Copeland, 2014). Consumer awareness is increasing, because aside from price and quality and other economic factors, noneconomic factors such as social responsibility are increasingly taken into consideration in consumers’ purchasing decisions (Yeung & Coe, 2015). An example of this is deliberately purchasing refurbished phones. In these phones, value is regained through used products, which can reduce the total amount of e-waste (Van Weelden et al., 2015). Although each individual’s consumption has a minimal impact on industry practices and companies, many people recognize that consumer activism becomes more effective by acting together (Baek, 2010). When the products are purchased in a more socially responsible or environmentally friendly way in larger quantities, it can put more pressure on companies’ practices. A large share of product demand is derived from public procurement. This is the purchasing of products and services by organisations in the public sector. Internationally, it represents a significant demand of products and services (Brammer & Walker, 2011). An organisation occasionally acquires thousands of mobile phones for their employees. If organisations and public procurers take into account sustainability and social responsibility issues when purchasing these products, it may have the potential to influence industries to produce socially responsible and environmentally friendly on a large scale (Edler & Georghiou, 2007). Sustainable public procurement can therefore be seen as a strategy to reach societal and environmental goals.

While many researchers have separately analysed the production network of mobile phones and sustainable public procurement, no research has been conducted in which these two concepts have been analysed in line with each other. In other words, the implementation of sustainable public procurement of mobile phones in practice has not been studied to date. The aim of this study is to research

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concerns in the public procurement of mobile phones. This will proceed by first

analysing existing research about the geographical nature of mobile phone production, public procurement of mobile phones in the Netherlands, and introducing the two promising models of Fairphone and Electronics Watch. Subsequently, the research design and methods will be explained. The results section of this study is divided in three stages by answering three sub-questions. Firstly, the organisation and structure of public procurement in the Netherlands will be examined. Next will be examined how what the regulatory implications of sustainable public procurement are. The last sub-chapter will examine how different organisations have implemented SPP differently, and what the related challenges are. Finally, the research results will be followed by the conclusions, a discussion and recommendations.

2. Theoretical framework

2.1 The geography of mobile phones

The mobile phone industry is truly global, with geographically dispersed processes of production and consumption in many different countries. In describing any industry’s structure, academics have differentiated between chains and networks, such as value chains, commodity chains, value networks and production networks (Porter, 1990; Gereffi, 1999; Coe et al., 2008). Even though they share a great deal of characteristics, an important distinction can be made between chains and networks. The vertical sequence of events and activities, connected within and between economic actors, leading to consumption and maintenance of a product or service is referred to as a chain (Sturgeon, 2000; Funk, 2009). A network, on the other hand, maps both the vertical and horizontal sequence of economic activities between actors. A chain can be viewed as a subset of a network, as a simplified fragment within the complex and dynamic network (Sturgeon, 2000).

In this research, the sequence of activities leading to consumption of mobile phones will be referred to as a global production network (GPN). Both organisationally and geographically, vertically and horizontally, different processes are structured at a variety of spatial scales (Hess & Coe, 2006). The network is not

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only comprised of phone production, but also activities such as marketing, sales and procurement. Specifically, the GPN can be divided in the following six stages: hardware production, software production, marketing and sales, telecom services, consumer end-use, and after-use (Nathan & Sarkar, 2010). Each stage consists of several sub-stages and processes that is further enhanced by the geographic complexity, which is characterized by an international division of labour, the specialization of different kinds of economic activities in different regions and countries (Knox & Marston, 2016). All sub-stages and processes in different places contribute to the production of the end-product.

The very first step in the production of phones is mining the minerals that are necessary in assembling the end-product. Approximately forty minerals comprise the hundreds of parts that a mobile phone contains. A significant percentage of these minerals originates from developing countries (Wernink & Strahl, 2014). The international division of labour becomes apparent in this first step of the network. Developing countries in the global South supply raw materials and minerals for the global North. Even though these activities comprise a large part of the supplying country’s GDP, it can be a big source of conflict. In absence of a strong state, mining activities can have negative effects on local communities. A well-known example of this is the Democratic Republic of Congo. Major mines in the country are controlled by armed groups who exercise power and control over the local population (Nathan & Sarkar, 2010). Potential state revenue is turned into personal income, and the local population is treated poorly. Minerals that originate from such regions and “whose control, exploitation, trade, taxation, or protection contribute to, or benefit from the context of, armed conflict” are referred to as conflict minerals (Le Billon, 2003, p.216). Four minerals that are often specifically referred to as conflict minerals are tin, tungsten, tantalum and gold, also known as the 3TG minerals (Fairphone, 2016).

The international division of labour is also evident in the process of phone assembly. These activities have been concentrated in newly industrializing countries. Most phone assembly factories are located in Southeast and East Asia, with China as the world’s largest exporter of mobile phones (Barrientos et al., 2011). These countries have achieved a significant industrial sector, mostly

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through foreign direct investment (Knox & Marston, 2016). While the expansion of labour intensive industries has created many jobs locally, much GPN employment is insecure and unprotected (Barrientos et al., 2011). The Foxconn phone factory in China is an example where economic upgrading did not translate in equal social upgrading. Employment is characterized by “excessive working hours, involuntary and often unpaid overtime work, lack of adequate safety measures, and military-style management practices” (Barrientos et al., 2011, p.325). Poor labour conditions of this nature are evident in many phone production facilities. When a wave of employee suicides from the Foxconn factory was reported in 2010, Apple and the factory were accused of “sweat shop” labour conditions (González, 2018).

Leading phone companies are a powerful player in the GPN and are held accountable for processes in the production of phones. An increasing number of companies have implemented codes of conduct and social responsibility and environmental reports (Andersen & Skjoett-Larssen, 2009). However, a gap exists between the desirability and the actual implementation of such practices. “Only a limited number of multinational corporations “walk the talk” of CSR” (Andersen & Skjoett-Larssen, 2009, p.75). That is part of the reason why NGOs such as Electronics Watch and companies such as Fairphone attempt to address certain issues in an alternative way from traditional approaches. These approaches will be clarified in the next sections.

Thus, the power relations among the GPN are very complex. Both consumers and brands have considerable power within the network, which means it is not necessarily brand-driven or consumer-driven (Hess & Coe, 2006). These power relations have a deeply geographical character; with their purchase, globally dispersed consumers indirectly influence the aforementioned localised cases of conflict in the production network. This is embedded in the notion of globalization where the local is situated in the global (Sturgeon, 2000).

2.2 Public procurement of mobile phones

This global-local relationship is not only influenced by individual consumers, but also by the public sector worldwide. The acquisition of products and services by organisations in the public sector is called public procurement (Witjes & Lozano,

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2016). The public sector consists of organisations and institutions such as schools, hospitals and governments. It represents substantial demand internationally, comprising approximately 16% of gross domestic product in member states of the European Union (Brammer & Walker, 2011). Depending on an organisation’s size and employee number, it can represent the purchase of hundreds to thousands of mobile phones.

Member states of the EU have to follow the rules set out in the EU Public Procurement Directive. According to this Directive, public procurers must select a supplier that is the most advantageous economically. This suggests that the supplier is offering (1) the lowest price; (2) overall the lowest cost; or (3) the most value for the procurer’s money based on price-quality ratio (Witjes & Lozano, 2016). In the latter, quality criteria could also include social or environmental criteria. This means that these criteria can be incorporated in public procurement (ibid.).

The inclusion of social and environmental responsibility issues in public procurement is referred to as sustainable public procurement (SPP) (Amann et al., 2014). SPP is built on the three pillars of sustainable development (UNEP, 2014). First, the economic factors, which include the costs of the entire life cycle of a product or service. Second, social and labour factors, which include labour standards, equality, and ensuring fair labour conditions. And third, environmental factors, which include natural resource use, environmental emissions and climate change throughout a product’s life cycle. There is considerable potential for using public procurement as an agent for innovation, as the public sector is responsible for providing products and services which can have direct consequences for social and environmental responsibility issues (Edler & Georghiou, 2007; Amann et al., 2014). Because of the purchasing power of public organisations, demand for certain products or services can be promoted and can set a trend for other sectors (Witjes & Lozano, 2016).

2.3 The models of Fairphone and Electronics Watch

Not much research has been conducted with regards to sustainable public procurement of mobile phones. However, throughout the last few years, two

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interesting models that can potentially influence the SPP of phones have been developed. First, the mobile phone company Fairphone and second, the NGO Electronics Watch.

Fairphone is a Dutch mobile phone brand that launched their first phone in 2013, followed by the Fairphone 2 in 2016. As the company name suggests, they are aiming to manufacture and supply as ethically as possible (Wernink & Strahl, 2014). They do this by focusing on interventions in four key activities in the GPN (Fairphone, 2018). First, they want to source fair materials, that are free of conflict and support local economies. Second, they aim to create long-lasting phone designs to increase longevity and repairability of the product. Third, they want to create good working conditions for factory workers, focusing on safety, fair wages and worker representation. Their final main area of focus is reusing and recycling mobile phones.

While Fairphone is very ambitious, some critics have been questioning their approach. The “fairness” of the actual product is an important part of the debate. Of the approximately forty minerals in a phone, Fairphone has identified the supply chains of four minerals (Fairphone, 2016). However, these minerals are tin, tantalum, tungsten and gold, also known as the 3TG minerals, the internationally-recognized conflict minerals (ibid.). They have created a transparent supply chain for all four conflict minerals, but the supply chains of the remaining minerals are not traceable. Moreover, some critics argue that the Fairphone is not as functionally and technologically effective as phones from leading companies (Page, 2015). Another point of discussion, and possibly subject to most criticism, is the fact that Fairphone’s assembly factory is located in China. This is generally negatively viewed upon by experts, due to the denial of workers’ freedom of association (Proske et al., 2016; Chan, 2013). Moreover, the poor labour conditions in China continue to be considered as a threat to social stability (Lüthje & Butollo, 2016). This is symbolized by the wave of Foxconn worker suicides.

Guohong, the factory that was selected to produce the Fairphone 1, is located in central China. This means it employed local workers rather than migrants and temporary workers (Wernink & Strahl, 2014). Moreover, they have set up a Worker Welfare Fund which “aimed to increase worker representation and worker

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management dialogue”, thus addressing the denied freedom of association (Fairphone, 2014). In 2014, Fairphone’s production moved to the new manufacturer Hi-P in Suzhou (Ansett, 2015). The company recognizes that a completely fair manufacturer does not exist, which is why they decided to continue the Worker Welfare Fund. They stress that strict monitoring is required by both Hi-P and Fairphone (ibid.).

While Fairphone offers a product with great potential regarding social responsibility, the NGO Electronics Watch offers a service to public procurers in that respect. It is the result of a 2013 project funded by the European Commission, in which several European NGOs collaborated to conduct research to the electronics industry and public procurement (Electronics Watch, 2018). After the project ended in 2015, Electronics Watch became an independent organisation. They believe that problematic activities in the mobile phone GPN can be changed with the help of public procurement (ibid.). With their large-scale, long-term contracts, the public sector can create market opportunities for companies that respect labour rights and hold those companies accountable. Electronics Watch helps in this process by acting as a middle-man between public procurer and manufacturer. The organisation offers tools and information, and by inserting the Electronics Watch Contract Conditions in hardware contracts, public procurers require contractors to apply due diligence to respect labour rights and safety standards (ibid.).

3. Research design

3.1 Research methods

The aim of this study is to research how the Dutch public sector integrates sustainability and social responsibility concerns in the public procurement of mobile phones. The primary data in this study has been collected through a qualitative research method with the use of semi-structured interviews. In total, nine interviews have been conducted, including one with Electronics Watch, and eight with Dutch public procurers. Primary data was also retrieved from e-mail communication with PIANOo, the Dutch public procurement expertise centre.

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Eelco Fortuijn, Dutch representative of Electronics Watch, was selected because of his extensive knowledge of social conditions in the production networks of electronics, and his experience with the implementation of this in SPP in the Dutch public sector. He was interviewed about sustainable public procurement, and the extent to which this is applied in the Netherlands.

The eight remaining interviews were conducted with Dutch organisations, including the municipalities of Enschede, Groningen and Utrecht, and the University of Amsterdam, Groningen, Utrecht and Wageningen, and one organisation that preferred to remain anonymous. The selected organisations are located in medium-sized to big cities and are geographically dispersed over the Netherlands. The University of Groningen and the municipality of Utrecht were selected because they are affiliated with Electronics Watch. Their respective municipality and university were selected to analyse the differences between organisations in the same city. The remaining organisations were selected to achieve a geographically more evenly dispersed selection, and to achieve representation from within and beyond the ‘Randstad’. The interviewees’ functions vary. In some instances, an organisation’s public procurer was interviewed, while in other cases employees within the organisation who are more directly involved in sustainability and social responsibility were redirected to be interviewed.

These interviews were focused on the mobile phones that are procured by the interviewees and to what extent sustainability and social responsibility concerns play a role in this. The main research question includes the notion of integrating sustainability and social responsibility concerns in the procurement process. In this study this is operationalized as integration of ElectronicsWatch and/or Fairphone and/or refurbished phones. All interviews were recorded and transcribed, after which they were analysed. They were all conducted and transcribed in Dutch, after which the data was processed in English.

Aside from the primary data, secondary data was analysed as well. This includes European Union (EU) policy documents and publications, public procurement information and instructions that are published on PIANOo, and the e-procurement platform TenderNed. To study the mobile phone GPN and the public procurement process, existing literature and research was analysed as well.

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3.2 Positionality and ethics

In any research it is important to acknowledge and apply certain aspects of positionality and ethics. During the process of conducting this research, several important elements were considered, including informed consent, the confidential management of data, and the researcher’s positionality.

Before starting the interview, the respondents were informed about the topic and purpose of this study and for which institution it is conducted. If they had any questions about the purpose or method, or about the study in general, the researcher would answer their questions. This is related to the notion of informed consent, which means that respondents were provided with enough information to make an informed decision about participating in this study (Bryman, 2012). Prior to starting the interview, the respondents were asked whether they agreed with the interview being recorded. Moreover, they were asked if they approved that their name would be mentioned in this study, or whether they preferred to remain anonymous. One of the respondents and the corresponding organisation preferred to stay anonymous. In this study, this organisation is referred to as Organisation A.

All interview data was processed and analysed precisely. This also means that some data, which was not intended to be spread beyond the respondent’s organisation, was not included in the analysis. Moreover, this study does not intend to harm any of the respondents or organisations that are part of the research, thus processing the data precisely and treating it confidentially.

There are several important aspects related to the researcher’s positionality. First, all interviews were conducted through calling. The lack of face-to-face interaction could have created a sense of distance, which also means that the conversation could have more easily been prone to misinterpretation. However, if there were any misunderstandings regarding jargon or certain concepts, the respondents were asked to clarify. Second, respondents’ answers could have been slightly steered or altered, based on the knowledge of the end purpose of this study. They might have had the tendency to provide desirable answers.

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4. Results

4.1 The organisation of public procurement in the Netherlands

The public procurement process is determined by several factors, both from within and outside the organisation. EU-wide rules apply to the procurement process. These EU directives, as well as the factors from within the organisation will be analysed in this sub-chapter. It will become clear how different organisations have adopted different policies regarding the procurement of mobile phones.

Due to the decentralised nature of the Dutch state, contracting authorities in the public sector are responsible for management of their own public procurement (European Commission, 2016). Aside from national, provincial and municipal authorities, this also includes organisations such as schools and hospitals. Policy-making and coordination of public procurement throughout the country is managed at the central level by the Ministry of Economic Affairs and its public procurement expertise centre PIANOo (ibid.).

In 2013, EU public procurement directives were incorporated into the national law. A broad set of standards was implemented, including the four main principles of non-discrimination, transparency, equal treatment, and proportionality of requirements (European Commission, 2016). All public procurers must take these principles in consideration in the formulation of requirements and in the process of selecting a supplier. The Public Procurement Act 2012, which was amended in July 2016, is relevant to all public procurement contracts (PIANOo, 2018a). This Act is further elaborated upon in the Public Procurement Decree, which consists of the Proportionality Guide, Works Procurement Regulations 2016, and the European Single Procurement Document. The Proportionality Guide aims to ensure that contracting authorities impose requirements that are proportionate to the scope and object of the contract. In the Works Procurement Regulations 2016, procedures for the procurement of works contracts are described. The European Single Procurement Document is a self-declaration form, which tenderers use to indicate that they agree to the imposed requirements.

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The public procurement process can be divided in three stages, the preparatory stage, the sourcing stage, and the utilization stage (PIANOo, 2018b). The entire process usually starts with an internal request from a department within the organisation when the contract with a supplier is ending (H. van Schot, pers. comm., 18 April 2018). In the case of mobile phones, contracts with suppliers generally last for at least three years (W. Kunstman, pers. comm., 18 April 2018). In some instances, in this case in the University of Groningen, an organisation may decide to stop purchasing mobile phones. Two years ago, they introduced the Bring Your Own Device policy, meaning that employees utilize their own mobile phone for work purposes (H. de Langen, pers. comm., 30 April 2018). This policy will be further explained in the end of this sub-chapter. For all other organisations, the mobile phone procurement process is carried out once every few years. Thus, when the contract is ending, the public procurement department of the organisation is notified and requested to select a suitable supplier. Before continuing to the sourcing stage, requirements and award criteria are prepared and formulated. This is usually conducted by the board, advisors and public procurement department of an organisation. In the municipality of Groningen, however, a user group of employees was voluntarily involved in creating the mobile phone specifications (W. Kunstman, pers. comm., 18 April 2018).

When the definite product specifications have been completed, the process continues to the sourcing stage, also called the tender process. This stage plays a central role in the public procurement process since it connects suppliers with an organisation’s specifications (Witjes & Lozano, 2016). In the Netherlands, this is done through the online platform TenderNed which is managed by PIANOo (European Commission, 2016). All Dutch public procurers are obligated to publish the specifications of any product or service on this platform. They can also decide to publish on TenderNed through a private e-procurement platform such as Negometrix. In that way, all suppliers are able to find all specifications, and can develop a particular business model to meet the procurer’s requirements (Witjes & Lozano, 2016). Suppliers can be filtered based on how they meet the public procurers’ requirements. This also means that in some instances, only suppliers that meet the requirements and criteria can offer a tender (PIANOo, 2018b). The

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public procurers then choose the most suitable supplier. The tender is finished when the contract between the public procurer and supplier is signed.

After the supplier has been selected and the contract is signed, the mobile phones are supplied, meaning that the final stage, the utilization of the product or service, has started. Within Dutch organisations, policies differ regarding the employees’ phone options, which is shown in Table 1.

Table 1. Different mobile phone procurement policies among Dutch organisations.

Name organisation: Mobile phone policy: Phone options:

Organisation A Choose Your Own Device No list; any phone ( Shortlist)* Municipality of Enschede Not chosen by employee

-Municipality of Groningen Choose Your Own Device Shortlist of five Municipality of Utrecht Not chosen by employee

(Choose Your Own Device)

-( Shortlist) University of Amsterdam Choose Your Own Device No list; any phone University of Groningen Bring Your Own Device

-Utrecht University Choose Your Own Device Shortlist of five Wageningen University Choose your Own Device Shortlist of two

* The sections indicated in brackets refer to future policies/tenders that are currently being developed.

4.1.2 The different mobile phone policies

In five of the eight organisations, employees can choose their own device (see Table 1). In two of those, a shortlist of five phones has been created, and in one organisation, a shortlist of two has been created (W. Kunstman, pers. comm., 18 April 2018; I. Gourbo, pers. comm., 20 April 2018; A. Bolhuis, pers. comm., 4 June 2018). This means that employees can choose one of these two or five mobile phones. In one of the organisations, the University of Amsterdam, there is no list of limited options (H. Moes, pers. comm., 19 April 2018). It is up to the employee to decide what kind of mobile phone they would like. Nevertheless, there are generally budget restrictions. This is also the case in Organisation A (Anonymous, pers. comm., 2 May 2018). However, in the course of conducting this research, Organisation A was organising and developing a new tender for mobile phones. This means that, in the very near future, they are making a shift from a policy with ‘unlimited’ options, to a policy with a shortlist of phones. In Table 1, this is

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indicated with the new future policy being shown in brackets. Similarly, the municipality of Utrecht was organising and developing a new tender for mobile phones. Whereas all employees received the same mobile phone, a Samsung, in the old policy, they will be able to choose from a shortlist with the new policy (C. Groot-Djakou, pers. comm., 23 May 2018). In the municipality of Enschede, employees cannot choose the mobile phone they will receive (H. van Schot, pers. comm., 18 April 2018). There is only one type of phone, specifically from the brand Samsung, that is supplied. This is the phone that all employees receive.

The University of Groningen is an outlier regarding the mobile phone policies. In this study, it is the only organisations that does not purchase mobile phones through the public procurement process. Two years ago, they introduced the Bring Your Own Device policy (H. de Langen, pers. comm., 30 April 2018). This means that the organisation has stopped purchasing mobile phones through a tender. However, all employees receive a personal budget of 200 to 250 euros per person, once every three years, to purchase a mobile phone. They can add their own personal money if they would like a more expensive one. Moreover, the university covers the costs of the mobile service provider if the employee utilizes his/her phone for work purposes.

4.2 Sustainable public procurement of mobile phones

Public procurement represents substantial demand in the Netherlands. In this research, the total amount of procured phones ranges up to several thousands per organisation. Because of this high purchasing power and the more constant demand, the public sector could more effectively realize changes through sustainable and socially responsible purchasing, in comparison with individual consumers (E. Fortuijn, pers. comm., 16 April 2018). Through their significant purchasing power, public sector organisations have the ability to leverage industries and markets to act more sustainably and socially responsibly (UNEP, 2014). Through sustainable public procurement (SPP), they can create long-term value by looking beyond the short-term costs (UNEP, 2014). The different mobile phone procurement policies that were introduced in the previous sub-chapter lead

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to differences in application of SPP. This is also caused by the legal nature of the SPP frameworks and directives. This will be explained in this sub-chapter.

4.2.1 SPP themes

In the Netherlands, SPP mechanisms are increasingly invested in (European Commission, 2016). According to PIANOo, the country’s procurement expertise centre, public procurers must consider the social and environmental impact of any procurement in addition to price considerations (PIANOo, 2018c). This is, however, not mandatory for institutions or organisations other than the national government (E. Fortuijn, pers. comm., 16 April 2018). If a public procurer does want to apply SPP, there are seven SPP themes that have been formulated: (1) social conditions in the supply chain, (2) social return, (3) green public procurement, (4) procurement of bio-based products, (5) circular procurement, (6) public procurement of innovation, and (7) opportunities for small and medium-sized enterprises (PIANOo, 2018c). According to Eelco Fortuijn, Dutch representative of Electronics Watch, the most important SPP theme in the mobile phone GPN is the first one, the social conditions (pers. comm., 16 April 2018). He stressed that although sustainability issues such as e-waste are important to address, the social conditions in the production network are more problematic than environmental concerns, based on the level of risk that both issues contain. Moreover, the social conditions can be seen as a significant contribution to existing concerns in the mining and production stages.

4.2.2 SPP legislation

For a range of product groups, PIANOo has selected sustainability and social responsibility criteria that the products must comply with. The product group ‘ICT hardware and mobile appliances’ includes mobile phones. However, no criteria have been drawn up for mobile telephones, which is stated explicitly in the document (PIANOo, 2017). Their reasoning for this decision is that it is difficult to formulate correct criteria for mobile phones because of the rapid developments

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within the industry (PIANOo, pers. comm., 8 May 2018). Moreover, they argue that it is impossible to influence certain issues in the mobile phone production network upon purchasing. This view is debatable, especially when the models of Fairphone and Electronics Watch are taken into consideration. These organisations actively try to address and influence concerning practices in the GPN. In that way, public procurers or consumers are more knowledgeable and can possibly choose a product or supplier that does not support or attempts to minimize those problematic situations in the GPN.

Because no criteria have been drawn up for mobile phones, PIANOo stated that contracting authorities can apply other criteria that are related to the production of mobile phones (pers. comm., 8 May 2018). However, the criteria are principally only compulsory for the government. All other contracting authorities can therefore decide for themselves whether they want to implement the criteria. This notion of a quasi-legal instrument, for which there is no monitoring, can be referred to as soft law (E. Fortuijn, pers. comm., 16 April 2018). As previously mentioned, the implementation of the seven SPP themes is not compulsory either. Thus, if a public procurer does not want to address any of the themes in the procurement process, they are not obligated to do so. Reasons for not wanting to address SPP themes, and specifically the social conditions theme, might be the extra work that is costly and inconvenient (E. Fortuijn, pers. comm., 16 April 2018). Because of this, Eelco Fortuijn assumes that in the majority of Dutch organisations, social responsibility ambitions might not be reflected in their public procurement processes.

4.3 Implementation of SPP in Dutch organisations

The different mobile phone policies and the soft-law principle related to SPP, has led to differences in implementation of SPP, and specifically the social conditions theme. In this research, three indicators of SSP of mobile phones have been recognized, that are related to the social conditions theme of SPP. First, whether the organisation has a contract with Electronics Watch. Second, whether the organisation offers Fairphone to their employees. And third, whether the organisation offers a refurbished phone to their employees. The presence of these

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indicators, related to the social conditions theme of SPP, in the researched organisations is shown in Table 2.

Table 2. Indicators of sustainable public procurement of mobile phones.

Name organisation: Electronics Watch: Fairphone: Refurbished:

Organisation A X (X)* Municipality of Enschede Municipality of Groningen X Municipality of Utrecht X (X) University of Amsterdam University of Groningen X Utrecht University X X Wageningen University

* The sections indicated in brackets refer to future policies/tenders that are currently being developed.

Three of the eight organisations have a contract with Electronics Watch. The fact that the remaining organisations do not have a contract with Electronics Watch does not imply that socially responsible public procurement is not important to them. Two of the remaining organisations offer a Fairphone to their employees, of which one also offers refurbished phones. These are indicators that the social conditions theme of SPP is considered and integrated.

Three of the eight organisations did not display any of the indicators. At the University of Amsterdam, public procurement is managed at faculty level, meaning that the employee chooses their phone in the procurement department of their faculty, and not at the central level (H. Moes, pers. comm., 19 April 2018). This organisation’s respondent was not the representative of any faculty but manages public procurement at the central level. It was stated that SPP ought to be of high importance for a faculty to lead to SPP in the selection of a supplier. Moreover, if that supplier is selected, it ought to be cheap as well, which was considered unlikely by the interviewee. The second organisation that did not display SPP indicators is the municipality of Enschede. The respondent argued he was not aware of any integration of social responsibility concerns in the procurement of mobile phones (H. van Schot, pers. comm., 18 April 2018). He stated that social conditions criteria, such as a ban on child labour, were not implemented in the

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procurement process, as far as he was aware. The third organisation that did not display the indicators is Wageningen University (A. Bolhuis, pers. comm., 4 June 2018). However, this university does only select suppliers that are able to sign their requirements regarding social conditions, such as a ban on child labour.

As previously mentioned, the University of Groningen does not purchase mobile phones through the public procurement process. However, employees do receive a personal budget to purchase a phone. This means that, even though the university is affiliated with Electronics Watch, they cannot apply those social responsibility criteria to the purchasing of mobile phones, as employees choose and buy the phones themselves (H. de Langen, pers. comm., 30 April 2018). However, they do apply the criteria that are affiliated with Electronics Watch to the procurement process of other electronics such as laptops.

4.3.1 Fairphone

Three of the eight organisations offer Fairphone (see Table 2). As previously mentioned, Organisation A was organising a new tender while this research was conducted. In that new future policy, Fairphones would be offered to their employees, which is why this is shown in brackets in Table 2. The municipality of Groningen offers Fairphones as well, even though it exceeded their initial budget (W. Kunstman, pers. comm., 18 April 2018). Moreover, they explicitly seek suppliers that can sign to meet their requirements regarding social conditions in the production network. Even though this is not mandatory to apply, the municipality of Groningen stated that they decided to do so because they consider it very important to know where the product originates from and that there was no case of child labour in the process (W. Kunstman, pers. comm., 18 April 2018). Utrecht University and Wageningen University are also concerned with these social responsibility issues and seek suppliers who can meet their requirements (I. Gourbo, pers. comm., 20 April 2018; A. Bolhuis, pers. comm., 4 June 2018). Moreover, sustainability is one of the important criteria for them. At Wageningen University, however, these concerns did not translate into any of the indicators. At Utrecht University this translated into the addition of a Fairphone as well as a refurbished phone to their shortlist of five options. However, of the approximately

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1500 purchased phones, fifteen are Fairphones. Thus, even though it is one of the five options on their shortlist, 1% of the purchased phones is Fairphone.

The municipality of Utrecht was organising a new tender while this research was conducted. Several months prior to this, they had started a Fairphone pilot, with the intention to decide whether Fairphones would be part of the new shortlist (C. Groot-Djakou, pers. comm., 23 May 2018). However, due to logistical difficulties and delays on Fairphone’s side, the municipality has not decided yet. However, the interviewee states that the possibility of the inclusion of Fairphones is very big.

Two of the organisations, the University of Amsterdam and the municipality of Enschede, were not familiar with the brand Fairphone. These are also the two of the organisations that did not display any of the SPP indicators related to the social conditions theme. Even though Wageningen University does not currently offer Fairphones to their employees, the employee stated it might be part of the mobile phone tender in the future (A. Bolhuis, pers. comm., 4 June 2018).

4.3.2 Refurbished phones

In this study, the University of Utrecht is the only organisation that offers refurbished phones to their employees. Their view regarding refurbished phones is positive, as they are offered in high quality which makes them seem brand-new, and it is a cheaper option than, for instance, an iPhone (I. Gourbo. comm., 20 April 2018). At this university, refurbished phones are chosen more often than Fairphones by their employees.

At the municipality of Utrecht, there was an initial suggestion to solely purchase refurbished phones and no new ones (C. Groot-Djakou, pers. comm., 23 May 2018). However, it was stated that the price difference between a new and refurbished phone from a big brand such as Apple, was very small. Moreover, within the organisation it was argued that refurbished phones are malfunctioning new phones that are sold for a cheaper price. Thus, the municipality decided to not solely offer refurbished phones, and that they would not be part of the new tender. However, the municipality has purchased approximately two thousand refurbished phones, separate from the public procurement process through the organisation ‘Closing the Loop’.

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The municipality of Groningen, on the other hand, deliberately decided not to offer refurbished phones (W. Kunstman, pers. comm., 18 April). This was the result of their user group who helped create phone specifications. It is unclear what this decision was based on, but they concluded that there was no demand for refurbished phones. There might have been a misunderstanding of what refurbished phones actually entail, or it might have resulted from perceived risks that trade-off the benefits (Van Weelden et al., 2015).

4.3.3 Challenges to SPP of mobile phones

From the previous sections can be concluded that there are different policies related to the public procurement of mobile phones, in which social responsibility concerns are implemented in varying ways. While the majority of the researched organisations display implementation of SPP indicators, there remain challenges. It has been argued by the interviewees that especially the phone specifications of price and phone technology either steered decisions toward or away from any of the SPP indicators.

In terms of technology, it has been argued that Fairphone is not comparable to mobile phones from bigger brands (W. Kunstman, pers. comm., 18 April 2018). Bigger brands might be able to offer the consumer more than Fairphone can at this moment in time (I. Gourbo, pers. comm., 20 April 2018). Moreover, the fact that an organisation can offer their employees Fairphones or refurbished phones, does not mean the procurement process is optimally sustainable or socially responsible, as there are more options than solely those phones. Those other options might not be addressing or attempting to minimize sustainability and social responsibility concerns in the production network. That is the unsatisfying part of the shortlist policy, as Eelco Fortuijn argued (E. Fortuijn, pers. comm., 16 April 2018). It is eventually up to the employee to decide what kind of phone they would like. They might prefer the technology and efficiency of other phone options over what Fairphone can offer. That is why the procurement representative of the municipality of Groningen does not deem it an option to solely offer Fairphones to their employees (W. Kunstman, pers. comm., 18 April 2018). At Utrecht University, refurbished phones are chosen more often than Fairphones. This might also be

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because people “know what they get”, when choosing a refurbished phone from a brand that is most likely bigger and more familiar than Fairphone (I. Gourbo, pers. comm., 20 April 2018).

5. Conclusion

The aim of this study was to research how the Dutch public sector integrates sustainability and social responsibility concerns in the public procurement of mobile phones. After interviewing eight organisations in the Dutch public sector, it became clear that there are varying ways of applying SPP. First, there are differences in policies related to mobile phones. Five of the organisations have a Choose Your Own Device policy, meaning that employees can choose which phone they would like. In two of these organisations, there is a shortlist of five options that can be chosen from. In one organisation there is a shortlist of two. The two other organisations had no list of limited options, meaning that employees can choose whichever phone they would like, apart from the budget restrictions that are usually applied. One of these organisations was making a shift toward the shortlist policy. In two of the eight organisations, employees could not choose their own device. In these cases, all employees received the same brand and type of phone. However, one of these organisations was making a shift toward a Choose Your Own Device policy with a shortlist. One of the researched organisations had applied a Bring Your Own Device policy, meaning that the organisation did not purchase phones through the public procurement process. However, all employees received a personal budget, which they could add their own money to if desired, to purchase a mobile phone.

Different forms of applying SPP have been recognized that are related to the social conditions theme. First, there are three organisations that are affiliated with Electronics Watch. This means that they insert the Electronics Watch Contract Conditions in mobile phone hardware contracts. This way, public procurers require contractors to apply due diligence to respect labour rights and safety standards. However, one of the organisations that is affiliated with Electronics Watch has the Bring Your Own Device policy. Thus, even though the organisation is affiliated with

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Electronics Watch, they cannot apply those criteria to the purchasing of phones, as all employees buy the phones themselves.

The second indicator of SPP is whether an organisation offers Fairphones to their employees. This is the case in two of the organisations, with one future addition in an organisation’s new tender. Another organisation has started a Fairphone pilot which means that it can possibly become part of the future shortlist.

The third indicator of SPP is whether refurbished phones are offered. One organisation purchases refurbished phones for their employees through the public procurement process. Another organisation purchases refurbished phones as well, but not through the public procurement process.

Thus, to answer the main research question, there are different approaches to implementing sustainability and social responsibility concerns in the public procurement process. As SPP is not mandatory to apply in the Netherlands, organisations can decide for themselves whether they would like to invest time, money and effort in procuring sustainably. This has led to varying ways and varying extents of applying SPP in mobile phones. Three of the eight researched organisations did not display any of the SPP indicators. However, in relation to the organisations that did, it should be stressed that the Choose Your Own Device policy is most common in this research, which means it is ultimately up to the employee to decide which phone they would like. This can be perceived as the unsatisfying aspect of such approaches.

6. Discussion

There are several limitations to this research that should be taken into account. First, it is beyond the scope of this study to encompass the entire production network of mobile phones, as it is a complex global set of interactions between different locations, in which wide-ranging regulations and actors play important roles. This complexity is enhanced by the general lack of transparency throughout the entire production network of mobile phones. Second, the public procurement process is very complex as well, with both EU-wide and local regulations and criteria. Not all laws and frameworks have been highlighted in this study, which is

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why this process has been analysed in a simplified form. Third, the indicators of SPP in this research were mostly based on one of the seven SPP themes, the social conditions theme. This is done because it can be seen as the most important theme when referring to the concerning social and employment conditions in the GPN. It can also be seen as the theme that carries the most risk, in the case of mobile phones. While some organisations did display other themes of SPP, such as social return, these other forms of SPP have not been included in the analysis. Finally, the researched organisation in this study are a very small part of the Dutch public sector. That is why these results should not be interpreted as a fair representation of SPP in the Netherlands. However, it should be noted that the selected organisations are fairly large, thus are responsible for a large share of the procured mobile phones.

6.1 Recommendations

After analysing and researching public procurement of mobile phones in the Netherlands, there are several aspects that can be recommended for future research. First, public procurement of mobile phones should perhaps be reconsidered. As nearly everyone owns a phone privately, it might not be necessary for all organisations in the public sector to purchase phones for their employees. This might lessen the contribution to problematic practices and activities in the mobile phone GPN, and it would drastically reduce the amount of e-waste. It would also result in lower costs for the organisation. This could be an interesting topic for future research. Moreover, it could be interesting to conduct this current research on a larger scale, including small, medium and big organisations with varying ranges of purchasing power. By providing a fairer representation of the country, it could provide interesting insights in SPP in the Netherlands. It would also be interesting to conduct this research in multiple EU member states, to compare how EU legislation is applied by different organisations in different countries.

Another interesting topic for future research is ‘Fairphone as a service’. This is a new potential business model that allows organisations and businesses to rent Fairphones, thereby shifting from ownership to service. This is in line with the concept of a circular economy, as ownership is put in the hands of the brand, which

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can help ensure optimal use of the resources. When the phone would otherwise be disposed in a linear economy model, it would be recycled and used for new products in a circular economy model. This would not only reduce problematic activities in the mobile phone GPN, such as the phenomenon of conflict minerals, but it would also reduce the amount of e-waste.

One of the interesting and promising aspects of Fairphone is that they aim to operate as transparently as possible. Improving the transparency of processes and traceability of minerals should not, however, solely be up to Fairphone or NGOs such as Electronics Watch. Leading mobile phone brands should also actively attempt to address and minimize risks that are connected to the mobile phone GPN. As long as processes remain intransparent and somewhat immeasurable, it will be difficult for both individual consumers and public procurers to consider these issues in purchasing decisions. Something that could help in improving transparency of processes and traceability of minerals is the application of a blockchain. This is a type of database that originates from the cryptocurrency network. It can also be applied to other systems, as its aim is to capture and secure information and processes. This could be promising for the improvement of transparency in the mobile phone GPN. It can therefore be an interesting approach for future research.

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