Self-regulation in an era of multi-stakeholderism: what
explains the low level of civil society participation in private
governance organisations in the electronics industry?
Steven Hawkes (11651628)
June 2018
Supervisor: dhr. dr. Philip Schleifer
Second Reader: dhr. dr. Luc Fransen
Master thesis Political Science (Public Policy and Governance specialisation)
Word count: 23,943
Contents
List of Abbreviations ... 3
1. Introduction ... 4
1.1. Research overview ... 4
1.2. Approach and structure ... 5
2. Research question ... 7
2.1. Research question and sub-questions ... 7
2.2. Societal and academic relevance... 7
3. Literature review ... 9
3.1. The rise of private governance ... 9
3.2. The role of civil society ... 10
3.3. Industry self-regulation ... 11
3.4. Co-regulation and multi-stakeholder initiatives ... 13
4. Analytical framework and hypotheses ... 15
4.1. Defining the dependent variable: civil society participation ... 15
4.2. Political institutionalist approach ... 16
4.3. Development of hypotheses ... 17
4.4. Relationships between hypotheses ... 23
5. Private governance of the electronics industry: an empirical puzzle? ... 25
5.1. Electronics industry overview ... 25
5.2. Supply chain responsibility issues ... 27
5.3. Private governance of the electronics industry ... 29
5.4. Civil society actors in the electronics industry ... 32
5.5. The low level of civil society participation in electronics industry private governance ... 33
6. Methodology and research design ... 37
6.1. Research design and case selection ... 37
6.2. Data sources and measurement ... 38
6.3. Methodological limitations ... 39
7. Results ... 41
7.1. History: a lack of trust, negative experiences and misaligned perceptions (H1) ... 41
7.2. Situational: absence of ‘trigger’ event and low awareness or salience of supply chain issues (H2) ... 45
7.3. Agency: Industry cohesiveness and civil society strategies and ideology (H3a and H3b) ... 49
7.4. Structure: The electronics industry, its supply chain, and the civil society ecosystem (H4a and H4b) ... 53
7.5. Summary and discussion of results... 57
8. Conclusions and prospects ... 60
8.1. Contribution and implications for theories of private governance ... 60
8.2. Contribution and implications for policy and practice ... 62
8.3. Limitations and the need for further research ... 65
8.4. Prospects for the electronics industry and for co-regulation ... 65
Bibliography ... 68
Appendix A: Interview information ... 75
List of Abbreviations
BAN – Basel Action Network
CAFOD – Catholic Agency for Overseas Development CEREAL - Center for Reflection and Labor Action CSO – Civil society organisation
CSR – Corporate social responsibility CoC – Code of Conduct
EC – European Commission
EICC – Electronics Industry Citizenship Coalition (now the RBA) EPEAT – Electronic Product Environmental Assessment Tool FLA – Fair Labor Association
GeSI – Global e-Sustainability Initiative
ICT – Information and communication technology IDH – Sustainable Trade Initiative
IGO – Inter-governmental organisation ILO – International Labor Organisation MSI – Multi-stakeholder initiative NGO – Non-governmental organisation
OECD – Organisation for Economic Co-operation and Development OEM – Original Equipment Manufacturer
PGO – Private governance organisation
PPA – Public-Private Alliance for Responsible Minerals Trade SOMO – Centre for Research on Multinational Corporations RBA – Responsible Business Alliance
1. Introduction
1.1. Research overview
This transnational sustainability governance research project will focus on the private governance of the electronics industry. Worth approximately $1.7 trillion, predicted to increase to $2.9 trillion by 2020 (Persistence Market Research 2017), the electronics industry can be seen as an archetypal ‘global value chain’ made up of complex globalised multi-actor activities including sourcing raw materials, design, production of components, product assembly, and distribution. As with many globalised industries, this has resulted in social, environmental and ethical concerns, ranging from labour standards and occupational health and safety to electronic waste, hazardous substances, and sourcing of ‘conflict minerals’.
Pressures such as these, arising from economic globalisation, combined with ‘the inadequacy of public governance institutions in addressing them’ (Mayer and Gereffi 2010: 1), have led to the rise of global private governance in recent decades, notably through private regulation. However, whilst this pressure has resulted in many industries participating in co-regulation with civil society (such as NGOs and unions) to improve social and environmental performance, the electronics industry is dominated by self-regulation, with little civil society participation in standard setting: ‘the act of agreeing on regulative rules, which, although being voluntary in nature, require some degree of compliance’ (Pattberg 2005: 178).
The Responsible Business Alliance (RBA) is the foremost private governance organisation (PGO) in electronics. It has over 110 members (including all large electronics companies from brands to suppliers) who adhere to the standards of its Code of Conduct. However, this is an industry-only body in terms of membership and governance. Meanwhile the Global e-Sustainability Initiative (GeSI) has a more knowledge and information-sharing focus yet is also industry-only, with no civil society actors in its governance, and the Electronic Product Environmental Assessment Tool (EPEAT, an eco-labelling scheme for electronics) has been criticised as an industry-dominated body whose standards ‘have been watered down to the point where they are largely meaningless’ (Koebler 2017). This self-regulation has prevailed despite the presence of active civil society organisations in the sector such as the GoodElectronics network, Electronics Watch, Greenpeace, and Basel Action Network (BAN).
GoodElectronics have claimed that ‘in electronics there are no multi-stakeholder initiatives. Neither do the industry’s sustainability initiatives engage with stakeholders on a structural basis’
(Overeem 2009: 13). This research project therefore seeks to understand: what explains the low level of civil society participation in private governance organisations in the electronics industry? Results (summarised in Table 3) suggest this is explained by a reciprocal lack of trust between industry and civil society due to a history of negative interactions, whilst the cohesiveness yet adaptability of the RBA and its emergence as ‘first-mover’ provides firms with little incentive to include civil society. This is compounded by the relatively nascent nature of civil society actors, characterised by limited resources and experience, hindering their potential to pressure firms and participate in co-regulation. The prominent role of suppliers further complicates power dynamics. This has led to stalemate where the industry accuses civil society of being unrealistic and over-simplifying complex issues, whilst civil society laments the overly risk-averse nature of an industry they see as unwilling to adapt a hugely profitable business model. High-profile scandals have occurred but triggered only selective engagement where firms remain in control, rather than sustained cooperation. The electronics industry, led by the politically-savvy RBA, has come to drive the discourse around these issues whilst nascent NGOs struggle to get a seat at the table, let alone have their voice heard. Prospects for the future point towards shifting industry power dynamics that seem likely to result in a pivot from civil society back towards public regulatory efforts.
1.2. Approach and structure
Using a qualitative in-depth analysis of the electronics industry as a deviant case study set-up, this research will pursue a deductive theory-testing approach. In this research, the electronics industry is treated as empirically anomalous as it fulfils conditions that might instead have led to the emergence of co-regulatory multi-stakeholder governance (big brands; products and violations with high salience; significant resources; existing CSR commitments; active NGOs) but, instead, has been dominated by self-regulation, with little meaningful cooperation between firms and civil society.
Taking a political-institutionalist approach that considers the dynamic relationship between agency, structure and history, hypotheses are developed and examined through qualitative data gathering in order to achieve confirmation (or otherwise) of the theory and hypotheses.
This paper will proceed in Chapter 2 by formulating the research question and sub-questions, outlining societal and academic relevance. In Chapter 3 a concise integrated literature review is provided, followed by an analytical framework and development of hypotheses in Chapter 4.
Subsequently, Chapter 5 provides an empirical overview of the low level of civil society participation in electronics industry private governance. Chapter 6 outlines the methodology and research design before each hypothesis is probed in Chapter 7, using findings from primary and secondary data. Finally, Chapter 8 considers the implications of results for academia and for practitioners and discusses prospects for the future of private governance in the global electronics industry.
2. Research question
2.1. Research question and sub-questions
The core research question is: what explains the low level of civil society participation in private governance organisations in the electronics industry?
A key underlying assumption behind this is that the default position of business is in favour of self-regulation and opposed to the involvement of civil society (Abbott and Snidal 2009). This research assumes that conflict between business and civil society is likely as their goals are misaligned: civil society is driven by ‘societal and environmental goals’, whilst business has largely ‘profit-driven commercial goals’ (de Lange et al. 2016: 1198). Cooperation therefore requires pressure from civil society and business willingness to engage.
Considering this, requisite sub-questions emerge which consider the empirical situation and the conditions under which this might be possible:
i. What is the empirical state of civil society participation in private governance organisations in electronics? (descriptive overview)
ii. Considering the above assumption, why has the electronics industry been successful in keeping civil society out of its private governance? / Why has civil society not been more successful in pressuring the industry to enhance its participation? (analytical)
iii. As a result of these findings, what are the prospects for future private governance in electronics? (policy-level discussion)
2.2. Societal and academic relevance
These questions are of societal and academic relevance. At a societal level, the situation raises important issues around the relations between corporations and NGOs, and limitations of activist pressure in promoting corporate social responsibility (CSR). The electronics industry is worth examining due to its size and global scope but also its increasing ubiquity in other sectors. Electronics have transformed our world and that transformation shows few signs of abating. Moore’s Law, observed by Intel co-founder Gordon Moore, states the number of transistors on a chip will double every 18-24 months while costs are halved. This is an astonishing growth rate but has proven broadly accurate since the 1960s, although there are signs it is finally slowing (Borwein and Bailey 2015).
Multiple stakeholders interviewed for this research highlighted how electronics standards and practices are influencing sectors it is spilling into, such as automobiles, apparel, health, toys, and
other products that feature electronic components as they become ‘connected’ through the Internet of Things. This raises social and environmental concerns. For example, the automobile industry has traditionally been highly-unionised, but the increasing influence of the often ‘union-free’ electronics sector (Matsuzaki 2015) has troubled some observers (Interview, NGO 2018). Tesla in particular has been accused of numerous anti-union practices (Wiessner 2018). Meanwhile, with estimates that there will up to 500 billion connected devices by 2025 (Vanian 2015), there are significant concerns around the challenges of collecting and recycling electronic components, as well as the vast energy consumption required to process so much data. This may be compounded by a trend towards device ‘miniaturisation’, making them harder to repair, disassemble and ultimately recycle valuable components or dispose of potentially hazardous ones at end-of-life (Interview, firm 2018; Furlong 2016).
At an academic level, the research engages with debates around the ‘institutional emergence’ (Bartley 2007) of transnational private regulation, the link between the design and stringency of private initiatives, and the structural and rule-setting power of multinational corporations in an increasingly globalised world (e.g. Lipschutz 2005; Kolk and van Tulder 2005). In particular, can the involvement of civil society help to ‘bring politics back in’ (Lipschutz 2005: 219), hold corporations to account, and ensure that voluntary commitments are more than mere rhetoric (Keck and Sikkink 1998; Vogel 2008; Bartley 2007; Sasser et al. 2006)? If so, what are the conditions under which civil society actors are more or less likely participate in private ‘regulation’ of firms (e.g. Fransen 2012a: 70-86; Vogel 2010; van Huijstee 2012)?
Gaining a better understanding of the conditions that have made this situation possible in electronics can contribute to explaining outcomes in other sectors and issue areas (although generalisations must proceed with caution), and an appreciation of why self-regulation remains powerful despite pervasive rhetoric of an era of vibrant multi-stakeholderism. In addition, the final sub-question discusses the implications of this and the prospects for future private governance in electronics. Finally, electronics is a relatively overlooked industry in the field of private governance (with exceptions including Raj-Reichert 2011; Locke and Samel 2018; Fransen and Conzelmann 2015), where research tends to focus on forestry, apparel and agricultural commodities.
3. Literature review
This chapter will introduce the rise of private governance and define the distinctions between industry self-regulation and co-regulation that involves civil society. It will present key debates in the literature around the conditions under which each is likely to emerge. These debates and findings will subsequently be utilised alongside a theoretical framework to develop hypotheses focused on the electronics industry.
3.1. The rise of private governance
Private, non-state governance has become increasingly prominent in recent decades, attempting to fill the global governance ‘institutional void’ (Hajer 2003) created by the absence or weakness of international regulatory standards in a context of rapid economic globalisation. Lipschutz refers to this ‘privatisation’ of regulatory activities away from the traditional realm of the state as ‘the new transnational division of regulatory labour’ (2005: 35).
The willingness of companies to accept (or even instigate) private regulation has been attributed to NGO pressure, corporate strategies (i.e. the ‘business case’) and shifting norms and values on what represents acceptable business conduct (Vogel 2008: 268-9). Bartley explains this willingness to engage as: ‘because public scrutiny, consumer concern, and the globalization of supply chains often disrupt markets and create collective dilemmas for firms, firms develop an interest in cooperating to set enforceable standards, create credible responses to skeptical consumers, and impose rationalized systems of constraint upon themselves and their competitors’ (2007: 306).
It is widely acknowledged that business requires a ‘social license to operate’ and therefore must at least be seen to engage with civil society (Burchell and Cook 2013: 510). Koenig-Archibugi finds that corporate participation in voluntary regulation is motivated by factors including ‘the concern that the business might lose customers and investors as a consequence of negative publicity; the hope to gain new customers and investors by projecting an image of corporate responsibility; the prevention of court litigation; the prevention of state regulation; and the improvement of the morale and loyalty of employees’ (2005: 125-126).
However, there is significant variation in the design and content of private governance, and the different actors involved in their development and management. A notable distinction is whether an initiative can be considered self-regulation, where industry participants set their own rules, or
co-regulation, where multiple stakeholders cooperate to set rules (Pattberg 2006: 243-244) which are voluntary but require ‘some degree of compliance’ (Pattberg 2005: 178). Table 1 defines this distinction.
Table 1: Self-regulation v co-regulation (types of private regulation)
Type of private regulation
Definition
Self-regulation ‘Arrangements where individual firms or business associations set their own rules of behaviour in the form of codes of conduct, corporate governance guidelines, or mission statements’ (Pattberg 2006: 243-244; Richter 2001: 40)
Co-regulation ‘Regulatory arrangements, wherein at least one actor is not a profit-making entity and therefore conflicts of interests and conflicts of values have to be bridged in order to institutionalize the cooperation and reap joint gains’ (Pattberg 2006: 244)
3.2. The role of civil society
Civil society actors have emerged as increasingly important in the rise of ‘private politics’ (Sasser et al. 2006), seizing the opportunity to ‘turn globalization on its head, making the global scope of business activity into a source of political vulnerability for global firms’ (Vogel 2010: 71). Newell notes that, somewhat paradoxically, NGOs began targeting firms ‘as a result of this renegotiation between state and market… because governments increasingly seem unwilling or unable to regulate the conduct of transnational corporations’ (2000: 32). As a result of this disputed but at least partially accurate ‘retreat of the state’ (Strange 2009), civil society actors themselves have become regulators. Whilst not traditionally ‘regulators’, civil society actors now do so ‘to the extent that they involve modification of habitual or customary rules of action, both individual and institutional’ (Lipschutz 2005: 53).
Civil society is defined here as a heterogeneous grouping of actors who are normatively and institutionally separate from both the state and the economic, profit-making spheres (Hutter and O’Mahony 2004: 2). This ‘third sector’ includes non-governmental organisations (NGOs) from environmental to human rights groups, trade unions, religious groups, and other non-profit groups linked by a common interest. NGOs in particular can be viewed as a continuum, from radical groups, often antagonistic to industry, to more moderate, cooperative groups (Sasser et al. 2006: 10). Both of these (and the many shades in between) play a role in pressuring or instigating industry action, although cooperative groups are of course far more likely to directly participate in co-regulation (ibid: 27). Authors including Braithwaite and Drahos (2000) have
noted the potential of civil society as key to future regulatory developments, and for solving, albeit imperfectly, the conundrum of accountability in global governance (Scholte 2004). To some extent this is a Gramscian perspective of civil society as the realm in which groups or movements seeking to challenge existing structures and rules are likely to emerge (Nielsen 1995: 45-46). NGOs have become increasingly legitimate and influential actors in transnational politics, and ever-more global in scope (Vogel 2010: 71; Scholte 2004). Through tactics such as information politics, symbolic politics, leverage politics, and accountability politics (Keck and Sikkink 1998), civil society aim to influence the behaviour of firms. This increasing influence can in part be attributed to the rise of global brands vulnerable to reputational threats, alongside the surge in international communications and global connectivity, allowing information to spread rapidly (Vogel 2010: 71).
Importantly, Vogel finds that ‘although adversarial relationships between NGOs and firms continue, both informal and formal cooperation between global firms and transnational NGOs have measurably increased’ (2008: 267). This increased cooperation is reflected in a wider turn towards multi-stakeholderism and an emphasis on partnerships and institutionalised collaboration (Levy 2012: 309; Pattberg 2006: 245).
However, even when not directly (institutionally) involved in private regulation, pressure from civil society often influences its emergence, even in the form of industry self-regulation. Bartley describes this institutional entrepreneurship of NGOs as part of the ‘political construction of market institutions’ where ‘political manoeuvring by nonmarket actors can create new industry governance institutions’ (2007: 339).
3.3. Industry self-regulation
This research starts from an assumption that corporations have a general preference for self-regulation over co-self-regulation. Abbot and Snidal note that ‘when advocates seek self-regulations that will conflict with profits… firms typically resist’ (2009: 60). Corporations favour self-regulation which permits them to ‘adopt more business-friendly rules and procedures, fine-tune rules to their individual situations, minimize compliance, and avoid potentially damaging intrusions by outsiders’ (ibid). This is consistent with the profit motive in economics: that firms are motivated to operate in ways that maximise profits.
Firm-led private governance has often manifested in the form of an industry code of conduct. This ‘rule-setting behaviour’ may be driven by corporate responsibility but often also a desire to influence other actors such as regulators, to stave off mandatory regulation, or customers and NGOs, to demonstrate ethical credentials and prevent reputational damage (Kolk and van Tulder 2005; Haufler 2000). Key to this is cooperation among competing firms, who decide it is in their interests to construct their own regulatory framework (ibid: 124). Sectoral codes of conduct are particularly common in industries with a high risk of harming the ‘collective reputation’ of an industry and often promoted by firms with high standards who seek to level the playing field (Koenig-Archibugi 2005: 128).
NGOs themselves may contribute to the perpetuation of self-regulation by being unwilling or unable to participate in co-regulatory initiatives. This may be due to the past success of more ‘outsider’ activist tactics, a fear of losing legitimacy by being perceived as ‘co-opted’ by business, and resistance at the level of the employee (de Lange et al. 2016: 1204). This activism may contribute to what Steurer calls ‘business self-regulation in the shadow of stakeholder pressure’ (2013: 400).
However, research shows that codes issued by business associations or individual firms prove weaker in terms of compliance, monitoring and specificity, particularly when compared to NGO or IGO-led initiatives (Kolk and van Tulder 2005; Kolk et al. 1999). Prakash and Potoski concur, finding that industry-led programmes ‘impose modest obligations on participants, provide weak monitoring and enforcement mechanisms, and… cannot be verified by outside stakeholders’ (2012: 126). Under pressure, business-driven programmes may include civil society stakeholders but often in a ‘pick and choose’ way that limits substantive input (Fransen 2012: 178) and maintains control. It has been claimed that these initiatives reflect a ‘lowest common denominator’ logic (Kolk et al. 1999). This accords with the idea that firms are generally weak on normative commitment and not representative beyond their economic stakeholders and are therefore ‘unlikely to produce regulatory standards and programs that serve common interests’ (Abbott and Snidal 2009: 67).
Here a key trade-off is posited in the literature: organisations with more lenient standards (often self-regulatory) are likely to attract a broader membership yet may lack legitimacy, whilst those with more stringent standards may have greater reputational benefits for members but are likely to have narrower participation of firms, often made up of those already engaged in sustainability issues (Fransen and Conzelmann 2015: 262; Borck and Coglianese 2009: 319-320). Different
PGOs are situated along this spectrum, with some reaching a niche of the industry but with high standards, and others more ubiquitous but with lenient standards.
3.4. Co-regulation and multi-stakeholder initiatives
Meanwhile, institutionalised NGO-business cooperation and multi-stakeholder initiatives (MSIs) have proliferated in recent years and carried with them high hopes for enhancing the legitimacy, credibility, and effectiveness of private governance (Albareda 2008; Utting 2005). Multi-stakeholder initiatives are defined here as those with ‘participants from both business and society interest groups as initiators and members, and if its governance structure allows for equal possibility of input among the different partners in steering the organization’ (Fransen 2012a: 44).
They can be seen as a potential remedy for a firm’s weaknesses: a lack of independence, weak normative expertise and commitment, and initiatives that, as a result, may lack legitimacy and credibility (Abbott and Snidal 2009: 67). It has been claimed that MSIs are uniquely capable of addressing complex situations by including a diverse set of stakeholders with complementary expertise, improving knowledge-brokering and social learning (Pattberg 2006; Fransen and Kolk 2007). Indeed, Pattberg finds that ‘institutionalized engagement with civil society creates dynamics that transcend and transform the field of corporate social responsibility as we know it’ (2006: 264). Fundamentally, the inclusion of affected stakeholders in a way that ensures procedural fairness is about enhancing the legitimacy of rules (Mena and Palazzo 2012; Young 2000).
MSIs have become increasingly common, fitting within a wider global trend of partnerships and ‘institutionalised forms of collaboration’ (Levy 2012). Koenig-Archibugi notes that ‘in many areas, self-regulation is giving way to co-regulation, as NGOs, IGOs and government agencies are willing to take a role in the promotion and management of voluntary accountability schemes… an effective way to address the accountability gap of TNCs’ (2005: 129, 130). This approach has been tentatively hailed as a possible ‘Third Way’ which ‘overcomes the perceived limitations of both government regulation and corporate self-regulation’ (Utting 2002). However, for firms, potential benefits in terms of legitimacy and reputational gain can be mitigated by the concern of control: ‘corporations, to adequately plan their activities and pursue their goals, desire a strong degree of control over the dynamics of their global supply chains’ (Anner 2012: 633). This tension therefore plays out in private governance, with self-regulation ensuring greater control but co-regulation providing greater legitimacy and reputational protection.
As with all forms of private governance, corporate preference for co-regulatory initiatives is influenced by the extent of societal pressure, as well as their position in the value chain and geographic distance to consumers and manufacturers (Fransen and Burgoon 2014: 585). For example, the Fair Labor Association (FLA) came about after significant societal pressure in the U.S. and Europe on ‘sweatshop’ labour in the 1990s apparel industry. In this field, a study by Bartley finds ‘both social movement pressure and reputational capital shape companies’ participation [in MSIs] … firms with consumer-oriented reputational capital (major brand investments) were significantly more likely’ (2009: 124). European firms were also generally more interested than U.S. counterparts (ibid: 125). In private environmental governance, Schleifer (2016) finds that big brands are key, but for this mechanism to work it requires corporate concentration (downstream), alongside strong institutional pressures for sustainability.
The potential motive of ‘doing well by doing good’ has, unfortunately, largely been debunked. Little empirical evidence suggests that ethically-minded consumers consistently reward firms for improving their supply chain responsibility in a way that makes up for the significant costs incurred (Vogel 2005). Despite numerous attempts, there have been few successes in overcoming the ‘intentions-behaviour gap’ where consumers fail to follow up on an intention to purchase ethical products (Carrington et al. 2010).
At the most basic level, Bartley has posited two necessary conditions for cooperation: ‘interested actors within the market (i.e., some segment of firms, though not necessarily a large segment) and entrepreneurial actors in the organizational field (typically in government or NGOs) that adopt the project, organize firms, and mobilize broader bases of support’ (2007: 339). Within these conditions, trust, participants’ governance structures and the urgency of the issue have been identified as other drivers of cooperation (de Lange 2016: 1205). There is evidence that prior contact between business and NGOs influences their willingness to cooperate (Fransen and Burgoon 2014: 595). This can establish a certain degree of ‘trustworthiness’ (van Huijstee 2012) necessary to ensure stakeholders are able to cooperate with feasible expectations and engage in constructive dialogue.
This chapter has defined the distinction between self-regulation and co-regulation and sketched the debate around the conditions that influence which might occur. Building on this, the following chapter will provide an analytical framework and develop hypotheses to be scrutinised in the research process.
4. Analytical framework and hypotheses
This chapter will employ insights from the literature review to formulate an analytical framework and hypotheses. First, it will discuss the concept of civil society participation (the dependent variable) and define what high or low participation would manifest as in a PGO.
4.1. Defining the dependent variable: civil society participation
The dependent variable of this research is civil society participation in private governance organisations. Whilst Chapter 5 will provide an empirical discussion of this in electronics, it is useful in advance to robustly define this. Civil society is the term used here to signify normative and institutional separation from the state and the economic, profit-making spheres (Hutter and O’Mahony 2004: 2). Participation refers to the extent to which civil society actors are formally or informally involved in decision-making and rule-setting.
A high degree of participation would manifest as formal (institutionalised) representation in a PGO’s governance, most obviously through Board participation but to a lesser extent through involvement in an advisory committee or other stakeholder group. This participation would be significant in terms of impact on decision-making and give the civil society actor access to appropriate information that might not otherwise be available. Procedural fairness is therefore important as well as inclusion (Mena and Palazzo 2012: 539). A multi-stakeholder governance model is likely, although not guaranteed, to ensure a high degree of civil society participation (van Huijstee 2012). Fair and balanced representation from civil society stakeholders across geographies (e.g. representatives from the Global South and intended beneficiaries) and focal issues (e.g. both environmental groups and unions) is also important to ensure meaningful participation.
Low participation, on the other hand, can be identified as informal (non-institutionalised), more ad-hoc engagement, with little identifiable impact on decision-making or standard-setting. This could manifest as ad-hoc consultation on specific issues or ‘pick-and-choose’ engagement (Fransen 2012: 178) limited to less critical groups. An industry-led self-regulatory model is, by definition, likely to result in a low degree of civil society participation, although there may still be some meaningful engagement. The participation that is existent is also less likely to be representative of stakeholders in the Global South, intended beneficiaries (e.g. workers), and groups working on issues which are more contentious to firms (e.g. unions or environmental groups). In between, there are of course many more nuanced shades on the spectrum.
4.2. Political institutionalist approach
Whilst this project will avoid a totalising ‘grand theory’, it will draw on and engage with theoretical insights from the field. Firstly, we assume a rationalist default position that ‘the more inclusive an initiative is and the more actors participate in it, the less autonomy a corporation gets. As rational actors, corporations therefore tend to choose initiatives where they stay among each other’ (Drebes 2014: 1266). Activist pressure is therefore essential for corporations to include stakeholders. This research aims to understand the conditions under which it has been possible for the electronics industry to resist this pressure – and/or why civil society actors have failed to exert sufficient pressure.
At a theoretical level, this research will take a political institutionalist approach. This is broadly in line with Bartley’s conception of institutional emergence as a political construction. Institution-building is ‘deeply embedded in the existing order, which shapes the resources, political opportunities, and cultural scripts’ and the site of ‘settlements of conflict among actors with differential power and competing frames’ (2007: 309). In this case the actors are firms, NGOs and (to some extent) states, playing entrepreneurial roles but simultaneously embedded in complex and dynamic social contexts that can constrain or enable strategies and interests, with opportunities further constrained or enabled by the broader cultural and political hegemony of neoliberal ideas, rules and practices (ibid: 307-311). Fransen (2011) takes a similar approach, viewing private governance as the product of political negotiation, impacting the balance of power and competition between relevant actors. As with much political science, power is at the heart of this analysis.
This approach views agency and structure as ‘not a dualism but a complex duality linked in a creative relationship’ (Hay and Wincott 1998: 956), similar to historical institutionalism but with emphasis on the political over the historical. Change is possible through individual agency but constrained by the structural context of institutions. Standing between rational choice theory and sociological institutionalism, ‘human beings are both norm-abiding rule followers and self-interested rational actors. How one behaves depends on the individual, on the context, and on the rule’ (Steinmo 2008: 163). In sum, ‘history and ideas matter, institutions structure actor’s choices but are subject to change by actors themselves, and real people make decisions that are not always efficient or purely self-interested’ (ibid: 178).
Hypotheses will be organised to account for history, situation, structure and agency. However, these are in a dynamic relationship. This research does not seek to claim that ‘history’ or
‘structure’ in isolation account for the low level of civil society participation. Rather, it seeks to identify specific elements which may have worked to reinforce one another and create the conditions where self-regulation has predominated, and co-regulation has not been possible.
4.3. Development of hypotheses
Drawing on this political-institutional framework, the following hypotheses have been developed under headings of historical, situational, agency, and structure, whilst acknowledging a dynamic, creative relationship between them. Hypotheses consider both elements of the second research sub-question in tandem: why has the electronics industry been successful in keeping civil society out of its private governance? And why has civil society not been more successful in pressuring industry to enhance its participation? Table 2 summarises these six hypotheses.
i. Historical
Other co-regulatory initiatives have struggled due to a history of conflict between firms and NGOs, preventing the establishment of trust and generating resistance. For example, Sasser et al. note that ‘in the U.S., given the history of their interactions with NGOs, many forestry firms are distrustful of advocacy groups’ (2006: 25), which led to some refusing to join the Forest Stewardship Council out of a belief that ‘NGOs have neither the right nor the competence to tell them how to run their forestry operations’ (ibid). This context was critical even under conditions of high vulnerability and normative pressure, resulting in these firms preferring to join an industry-only alternative. A lack of trust ‘makes firms unsure how NGOs will enforce the program rules… [and] firms fear that NGOs… might opportunistically impose new obligations in the future’ once they have gained institutional power (Prakash and Potoski 2012: 126). Indeed, some studies have even suggested that CSR and stakeholder engagement can put a firm’s reputation at risk by making it a more visible, attractive target (Graafland 2018), whereas industry laggards fly under the radar more effectively.
The reverse may also occur: civil society actors may not want to cooperate with firms due to a history of futile interactions which have wasted resources and time and put their reputation at risk. This may be the case previous voluntary commitments have been undermined by ‘backsliding’ or ‘greenwash’ by firms (O’Rourke 2005). Indeed, Bartley et al. note that efforts for NGOs to join the EICC in an advisory role ultimately failed: ‘NGOs declined to accept this marginal, token position’ (2015: 192).
It is worth noting here that ‘trust’ is often lacking between industry and civil society. However, ‘trustworthiness’ in terms of trusting the other party will keep their word is a more likely precondition and may lead to the establishment of trust over time (van Huijstee 2012: 25). Hypothesis 1a therefore considers whether:
H1: The low level of civil society participation in electronics industry private governance is explained by a lack of trust due to a history of conflict and negative experiences of past interactions
ii. Situational
Previous research has established that corporate preference for multi-stakeholder initiatives is ‘positively affected by societal pressure on companies… predominantly orchestrated by NGOs’ (Fransen and Burgoon 2014: 585). This societal pressure can include high-profile public campaigns, informal NGO contacts, consumer requests, and media pressure (ibid: 594). High-profile brands are evidently more vulnerable to pressure (Marx 2008; O’Rourke 2005). They are more likely to have frequent interaction with civil society and be open to cooperation in order to ‘appease critique and diminish risk of media scandal, reputation scandal, and loss of consumer and/or shareholder confidence’ (Fransen 2010: 84). Following this logic, the most visible electronics brands should be sensitive to pressure and more open to civil society cooperation. Pressure has grown on the industry since the early 2000s to address social and environmental exploitation in its supply chain (Raj-Reichert 2011; Overeem 2009). However, this pressure seems to have been insufficient compared to other, more prominent (and effective) campaigns such as on sweatshop labour. Indeed, authors have highlighted how little consumers seem engaged with ethical issues in electronics: ‘provenance does not appear to be an important purchasing consideration for electronics’ (Bartley et al. 2015: 207).
A plausible causal mechanism to explain this could be the absence of a sufficiently prominent ‘trigger’ event or scandal in the sector, which would mobilise civil society, consumers and the media to pressure the industry. For example, the exposure of exploitative sweatshop labour in the 1990s led to pressure which succeeded in negatively impacting the sales and stock prices of target firms and initiating co-operation between industry and civil society (Bartley and Child 2011). The Rana Plaza disaster is another high-profile example. In contrast, it is plausible that a low level of awareness or salience of supply chain issues in electronics has limited civil society pressure.
The following situational hypothesis (2a) is therefore worth considering:
H2: The low level of civil society participation in electronics industry private governance is explained by the absence of a sufficient ‘trigger’ event and low awareness or salience of supply chain issues
iii. Agency
Industry self-regulation can function to ‘disarm NGOs and public advocates by undermining their case’ if large firms act cooperatively to gain a ‘first mover’ pre-emptive advantage (Abbott and Snidal 2009: 75). Fransen highlights this as ‘the activist dilemma’ in that most companies are now taking responsibility in some way, and it is far more challenging to pressure them to change the details of this than to secure initial action (2010: 149).
As noted above, the electronics industry acted first to establish the Electronics Industry Citizenship Coalition (EICC) in 2004. Raj-Reichert finds this was ‘a decision by firms not to compete on labour and environmental issues’ (2011: 226) whilst Fransen and Conzelmann find it to be a notable example of ‘cohesive’ private regulation, in part as a result of ‘lenient standard-setting by the first-mover… and the formal exclusion of CSOs in negotiation and governance’ (2015: 268). This cohesiveness in electronics is fairly unique. As a result, the industry may see no need, or be unwilling to accept the risk that comes with the participation of civil society. Indeed, Kolk et al. suggest that, beyond initial awareness-raising, firm-led initiatives can ‘become public relations and alibis against more drastic steps, rather than active means to increase corporate social responsibility’ (1999: 171). A less cynical perspective would suggest that the importance of an industry-only ‘safe space’ to discuss shared challenges (RBA 2018) could lead to this same result of entrenchment.
Either way, the agency of persons and organisational dynamics of the RBA may have set the industry on a course of path dependence (here it is clear that agency and history blur) which continues to exclude civil society. This may have enabled the RBA to stay ahead of the curve and resist civil society pressure by adapting internally. Fransen and Conzelmann note the importance of these ‘flexible additions’ made within a PRO that ‘cater to diversity among firms without endangering the common ground’ (2015: 272). It is therefore worth examining the following hypothesis (3a):
H3a: The low level of civil society participation in electronics industry private governance is explained by the ‘first-mover’ advantage gained by industry and the coalescence of industry around the RBA/EICC
In addition, we should consider the agency of civil society. Bartley points out that the emergence of private regulatory initiatives requires both interested firms and ‘entrepreneurial actors in the organizational field… that adopt the project, organize firms, and mobilize broader bases of support’ (2007: 339). This may seem a basic condition, but it is common for civil society to act as the ‘orchestrator’ or ‘mediator’ of societal pressure (Fransen 2010: 119). An obvious example would be the role of WWF in leading a number of multi-stakeholder roundtable processes on agricultural commodities (WWF 2010). Evidence suggests more frequent contact between firms and NGOs leads to a ‘routinization’ of this relationship which leads to deeper collaboration (den Hond et al. 2015: 210). In the absence of this, it is difficult for co-regulation to develop.
Different civil society actors pursue different tactics on as a spectrum of ‘insider’ to ‘outsider’ methods (Barakso 2010), often in part based on ideological beliefs. ‘Outsider’ NGOs are more likely to be antagonistic towards industry. For example, members of Attac, the alter-globalisation movement, would be unlikely to view co-regulation favourably for both ideological and strategic reasons.
However, beyond ideology, cooperation comes with risks that NGOs are aware of: ‘a cooperative NGO risks losing its legitimacy, as it appears to be co-opted by an MNC that does not even seem to change’ (de Lange et al. 2016: 1204). This risk may endanger cooperation in its early stages or mean this ‘complex bargaining’ process is simply not attempted at all (Abbott and Snidal 2009: 71). As a result, some are keen to cooperate, but others prefer to stay at a ‘safe distance’ (van Huijstee 2012: 39), often due to a real or perceived danger of co-option, strategic choice, or ideological beliefs (Sayer 2007: 152) of the civil society organisation or key individuals as free agents. Hypothesis 3b therefore seeks to examine whether:
H3b: The low level of civil society participation in electronics industry private governance is explained by civil society actors in the sector preferring ‘outsider’ tactics and an ideological or strategic preference for antagonistic over more cooperative methods
iv. Structure
The electronics industry can be conceptualised as an ‘institution’ that constrains and enables actor choices. It is possible that structural characteristics of the industry and its supply chain have contributed to the low level of civil society participation. Research on the industry has noted that ‘compared to clothing and forestry, the horizontal concentration of the electronics industry is higher, so fewer firms compete and a small group of firms may determine the political course of action in the industry’ (Fransen and Conzelmann 2014: 267). Under these conditions, Abbott and Snidal point out that ‘key firms and industry associations can exercise leadership in developing sector-wide norms that promote social goals and preserve the industry’s reputation without undermining any individual firm’ (2009: 60). It is plausible that this is more likely when an industry is highly concentrated and shares key characteristics, such as the technological similarities and shared supplier base in electronics (Raj-Reichert 2011: 226). A more concentrated industry may also be more likely to possess a ‘reputation held in common’ (Prakash and Potoski 2007), stimulating cohesive industry-led action (see H3a). It is plausible that this concentration subsequently had the effect of lowering competitive pressures on CSR and may have a tentative causal relationship on low levels of civil society inclusion.
Connected to this concentration are structural characteristics regarding the industry’s supply chain dynamics, which may influence its inclusion of civil society. Following this line of thought, the structure of the supply chain constrains the agency of actors such as firms. For example, Bartley et al. find that ‘the architecture of electronics production, honed by decades of growing competition and shrinking product life cycles, has created a system of work organization that appears to be both exploitative and resistant to change’ (2015: 206). They suggest that this is caused by its very structure of consumption and production, characterised by insatiable demand for ‘new’ products and the extreme flexibility required for this (ibid: 181-182).
The complexity of the electronics supply chain may also contribute. It is characterised by significant outsourcing and can be seen as ‘an intricate web, with brand name companies that have many suppliers, who in turn have multiple suppliers themselves. These buying companies may themselves also be component suppliers’ (Overeem 2009: 19). The supply chain is also dynamic, with component suppliers changing even between different batches of the same product.
The supply chain is further complicated by the rise of suppliers themselves as powerful multi-nationals, often rivalling brands who might be more likely to adopt a conciliatory approach to
civil society. Locke and Samel note that ‘these are not the typical supplier one imagines existing in the apparel or toy industries of the global South’ (2018: 3), many in fact have revenue in the billions and globally-spread operations. It has been suggested that brands now show signs of dependency on suppliers, and this ‘non-reciprocal dependency adds a complex dynamic to the power relationship’ (Raj-Reichert 2011: 232). For example, Hon Hai/Foxconn has been the only manufacturer of the Apple iPhone and iPad since 2007, giving them significant influence even during periods of scandal (ibid; Merchant 2017). Schleifer (2016) finds that the rise of South-South trade and emerging markets are undermining the conventional mechanism of private governance. In electronics this may also be the case due to complex and shifting power dynamics. This hypothesis can only be tentative regarding a causal link with civil society participation. However, there is a certain degree of plausibility that structural characteristics of the industry, specifically its concentration, complexity and supplier power, have been factors:
H4a: The low level of civil society participation in electronics industry private governance is explained by structural characteristics of the electronics industry and its supply chain (concentration, complexity, supplier power)
Finally, it is important to consider structural characteristics of the relevant ecosystem of civil society actors. Bartley points out that ‘the power and cohesion of NGOs relative to firms and governments is likely to be a major factor in determining whether global industries get embedded in private systems of governance (and how strong these are)’ (2007: 340).
This power and cohesion may be limited by resource constraints in terms of funding, staff, and information. In the realm of global governance, Scholte observes that ‘most civil society engagement… has occurred on a shoestring’ (2004: 223), often limiting success. Participation in the development of private regulation can be time-consuming and costly for NGOs, who often have to act as the institutional entrepreneurs and architects of new initiatives; wielding a careful balance of the carrot and the stick (Bartley 2007; Sasser et al. 2006). Abbott and Snidal point out that of all actors, NGOs have the most limited unilateral ‘Go-It-Alone-Power’, whereas firms tend to have the strongest (2009: 77-81).
As a result of NGO’s lack of resources (financial, human, and informational), limited authority and crowded agendas, the ideas that triumph even after a crisis often fit with the interests of the powerful (Mattli and Woods 2009: 39). This is exacerbated by the relatively nascent nature of many civil society actors, meaning they lack institutional experience (Scholte 2004: 224) and an
established network. Connected to this, the nature of many NGOs as networks themselves can be problematic, often lacking ‘clearly established procedures to formulate and execute joint positions’, whilst members ‘invariably have to negotiate differences… regarding priorities, analyses, strategies and tactics… all the more difficult in cross-sectoral and trans-border advocacy’ (ibid: 225). As a result, firms may be less likely to feel they can trust civil society actors (H1) and resist cooperation. This is particularly pertinent in electronics, where the foremost organisation (the GoodElectronics network) is membership-based, made up of an alliance between unions and NGOs who do not always agree. H4b will therefore examine whether:
H4b: The low level of civil society participation in electronics industry private governance is explained by structural characteristics of the ecosystem of civil society actors (resources, experience, governance)
Table 2: Summary of six hypotheses.
The low level of civil society participation in electronics industry private governance is explained by…
1. Historical H1 A lack of trust due to a history of conflict and negative experiences of past interactions
2. Situational H2 Absence of a sufficient ‘trigger’ event and low awareness or salience of supply chain issues
3. Agency H3a The ‘first-mover’ advantage gained by industry and the coalescence of industry around the RBA/EICC
H3b Civil society actors in the sector preferring ‘outsider’ tactics and an ideological or strategic preference for antagonistic over more cooperative methods
4. Structure H4a Structural characteristics of the electronics industry and its supply chain (concentration, complexity, supplier power)
H4b Structural characteristics of the ecosystem of civil society actors (resources, experience, governance)
4.4. Relationships between hypotheses
In addition to these hypotheses, it is worth examining the relationships and possible co-variations between them. Existing research suggests that industry concentration (H4a) created a key element of the conditions for the industry to gain a first-mover advantage (H3a) with a cohesive
PRO (Fransen and Conzelmann 2015). Meanwhile structural characteristics of civil society actors (H4b) are likely to constrain their agency in terms of strategic and tactical decision-making (H3b). H1 and H3a/3b may also be linked, illustrating the symbiotic relationship between agency and history. The agency of firms and civil society can be seen as contributing to a history of conflict and low levels of trust which prevent institutionalised cooperation. A similarly embedded relationship can be posited between structure (H4a and H4b) and historical (H1) and situational (H2) factors. These linkages were considered in the research process and are discussed in Chapter 7.
5. Private governance of the electronics industry: an empirical puzzle?
This chapter will provide a descriptive overview of the social and environmental detriments of the industry, its PGOs that aim to ‘regulate’ these, and civil society actors in the field. It will analyse levels of civil society participation within these organisations, providing substantive evidence that they are low.
5.1. Electronics industry overview
The electronics industry was born in Silicon Valley, California, in the 1970s and has experienced rapid growth ever since, with 22% year-on-year sales growth from 2000-2011 (Mayer 2013: 4). The term ‘electronics industry’ refers to a range of ICT firms producing electronic goods, from computers and smartphones to semiconductors, circuits, and other components. The vast majority of manufacturing is now outsourced from Original Equipment Manufacturers (OEMS, ‘lead firm’ brands like Apple, Dell or HP who focus on product design and innovation) to Electronics Manufacturers Service (EMS) providers, non-consumer facing contract manufacturers like Foxconn or Flextronics, largely based in Asia. Indeed, 91% of all computers and 71% of mobile phones are manufactured in China (Ciu 2013). EMS providers offer OEMs flexibility, low-cost labour, and help them spread risks (van Liemt 2007).
The sheer complexity of electronic devices means there will be multiple tiers of suppliers involved in sourcing, manufacturing, and assembling each different component (Schipper and de Haan 2005: 20). One firm interviewed for this research stated they have around 9,000 suppliers, with some components stretching to 12 tiers of firms, although most tend to be 3-4 (Interview, firm 2018). Most of this information is not public and can be opaque even to OEMs due to the dynamic nature of the supply chain, intellectual property issues, and varying degrees of leverage they will have over suppliers (ibid). A lack of transparency, even basic information such as the names and locations of factories, has been highlighted by civil society actors as a particular challenge (Overeem 2015: 277). Greenpeace’s most recent ‘Guide to Greener Electronics’ found just two of the 17 brands evaluated published names and locations of suppliers (Cook and Jardim 2017: 3).
The industry seems an appropriate arena for multi-stakeholder governance to emerge: it features a number of powerful consumer-facing brands, high-profile products and violations (for example, Apple’s labour rights issues, see Frost and Burnett 2007), significant financial and technical resources (Locke and Samel 2018), and brands with established commitments to CSR such as HP,
Philips and Dell. In addition, the field has a number of active NGOs who possess relevant expertise (e.g. GoodElectronics, Electronics Watch, Greenpeace) and a willingness to cooperate, with GoodElectronics both publicly and privately requesting a multi-stakeholder arrangement on numerous occasions (Overeem 2015). These factors would seem to make consumer-facing electronics giants in particular, from Apple to Samsung, vulnerable to societal pressure.
Bartley et al. note ‘the electronics industry is very dynamic… leading companies have strong management, well-capitalized balance sheets, substantial cash flows, and deep technological and innovative capacities’ (2015: 180). A lack of resources and narrow profit margins therefore are unlikely to account for exploitation in supply chains, although supplier margins are far thinner. Most production occurs in rapidly industrialising yet stable countries like China, Thailand and Mexico, although ‘as it turns out, growing their electronics industry, not regulating it’ tends to be the priority in developmental states (ibid: 205). Electronics firms cannot easily threaten to relocate operations, since they tend to have high fixed investments, as well as long-term relationships with suppliers who understand their product (ibid: 181). This is, however, disputed by Overeem due to the high degree of outsourcing and interchangeability of components from different suppliers (2009: 19-20). This discrepancy is most likely explained by the different types of suppliers: those supplying high-value components or operating at vast scale can exert a certain influence, but many operating on a smaller scale or producing cheap components like screens and plastic casings often cannot (Interview, firm 2018).
It is vital to look beyond branded OEMs and their significant profit margins. Contractors ‘are under intense pressure from Brand Names to squeeze down factory prices… a squeeze on manufacturing costs essentially means a squeeze on labour’ as material costs tend to have strictly controlled prices (Harris 2014: 5). Direct labour costs represent just 2% of the factory selling price, or 0.5% of the retail price, but up to 40% of a contractor’s manufacturing costs (ibid: 4-5). One report notes, ‘product change is blistering. Life cycles are short... to a large degree the success of consumer electronics was possible because of the lower profitability of the outsourcing manufacturing infrastructure providers’ (Mayer 2013: 6-7). The renowned speed and flexibility of contractors often comes with a human cost. Short product lifecycles and a ‘cauldron of market hype push and responding consumer demand’ mean fast ramp-ups are critical, with resulting pressures on labour (ibid: 7-8). However, a number of contractors today have significant bargaining power over brands who are often dependent on them, adding a ‘complex dynamic to the power relationship’ (Raj-Reichert 2011: 232) that runs counter to the prevailing narrative. Studies of other industries have highlighted how South-South trade and the importance of
emerging markets are undermining established buyer-driven mechanisms of private regulation (Schleifer 2016).
5.2. Supply chain responsibility issues
i. Human and labour rights
There have been a number of concerns raised regarding human and labour rights in electronics supply chains. Electronics Watch claims that pressures of ‘just-in-time’ fast and low-cost production result in significant abuses of workers’ rights: ‘factories demand excessive overtime hours to complete orders on time, and increasingly use temporary workers—often migrant, agency, or student workers— who may be paid less, have fewer benefits, and are more vulnerable to abuse than regular workers… workers are increasingly vulnerable to other abuses, including serious health and safety hazards, such as prolonged exposure to cancer-causing chemicals’ (2018). Rather than unfortunate side-effects, many have claimed these abuses are essentially built-in to the business model of electronics (Locke and Samel 2018). Harris surmises that ‘in essence both sides of this industrial circus [brands and contractors] are playing their billion dollar tension out on the backs of impoverished workers’ (2014: 9).
Forced labour has been a particular issue. A landmark 2014 report by Verité, funded by the U.S. Department of Labor, found 32% of foreign migrants working in Malaysia’s electronics factories met even a conservative definition of forced labour. 50% were paying off recruitment debts for at least half of their first work contract and 71% reported that it was difficult or impossible to get their passports back when they wanted them from the facility or recruitment agent (Verité 2014: 10).
The industry has also raised significant concerns around freedom of association (CEREAL 2016; Overeem 2015). Some activists have alleged an opposition to unions was ‘baked into the tech world’s culture from the very beginning’, with Robert Noyce, co-founder of Intel, once famously stating that “remaining non-union is essential for survival for most of our companies” (in Roose 2013; Interview, NGO 2018). Research by SOMO claimed that ‘workers are categorically denied the right to associate freely and bargain collectively. Workers in electronics companies are usually not allowed to elect their own representatives; nor are they able to communicate, let alone negotiate, with management…[which] makes it almost impossible for workers to improve their working conditions’ (de Haan 2012: 1). Samsung in particular has come under fire for its
‘no-union’ policy, with recent allegations of union-busting now being probed by South Korean prosecutors (Park 2018). It is also notable that much of the labour-intensive manufacturing has shifted to Special Economic Zones or Export Processing Zones, where labour rights are not given priority and labour laws often unenforced (Overeem 2009: 20; Interview, NGO 2018).
ii. Environmental issues
From mineral extraction and processing to fossil fuel consumption, chemical usage and colossal volumes of e-waste, there is growing realisation that the global electronics industry is leaving a vast environmental footprint (Grossman 2006; Smith, Sonnenfeld & Pellow 2006). Whilst labour rights in the sector have hit the headlines, its environmental impact has been less prominent. Grossman suggests that we ‘behave as if high-tech products exists in some kind of cyberuniverse, one that has little to do with the air we actually breathe, the water we drink, the food we eat, or our children’s health’ (2006: 14).
Rapid technological advances and the relentless proliferation of electronics have resulted in serious environmental concerns. It is estimated that more than 7 billion smartphones have been produced in just 10 years (Jardim 2017), driven by increased ownership but also rapid churn of devices. Smartphones contain at least 60 elements, most of which are obtained through mining operations, including in conflict-zones like the Democratic Republic of Congo (ibid). Workers are often exposed to hazardous chemicals in factories whilst vast amounts of energy are required to produce increasingly complex devices that, paradoxically, quickly become obsolete. In 2016, 44.7 million metric tonnes of e-waste were generated, equating to 6.1kg per person globally (Balde et al. 2017: 5). The fate of 76% of this was ‘unknown’, meaning it was likely to have been dumped, traded, or recycled in the informal sector (ibid).
This environmental harm is amplified by shortening lifespans, and products which are rarely designed to be easily repairable or recyclable. Commonly-cited examples include the increasing prevalence of glued-in lithium ion batteries, use of proprietary or security screws, and a lack of publicly available repair guides (Schaffer 2017). Greenpeace summarise this business model as ‘inherently unsustainable, relying on finite materials, extracted and processed using chemically intensive processes and dirty energy to make short-lived products, designed for obsolescence’ (Jardim 2017: 6).
5.3. Private governance of the electronics industry
Faced with pressure from activists and the public over some of these issues, the industry reacted by instigating self-regulation rather than co-regulation with stakeholders. The RBA can be seen as the flagship initiative, whilst I will also outline two others: GeSI and EPEAT.
i. The Responsible Business Alliance (RBA)
The Electronics Industry Citizenship Coalition (EICC) was formed in 2004, following a landmark CAFOD report exposing labour rights abuses in the supply chains of IBM, HP, and Dell (CAFOD 2004). The findings and public reaction prompted the industry to act, with several brand names and suppliers joining together, led by HP as its ‘CSR entrepreneur’, to develop an industry-wide Code of Conduct to ‘reduce the burden suppliers faced from numerous customer requirements and standards by harmonising them into one approach for the industry’ (Raj-Reichert 2013: 29). The EICC re-branded as the RBA in 2017, in response to its expanding scope and membership, and in recognition of the increasing ubiquity of electronics in other products. Today, the RBA has over 110 members with a combined annual revenue of over $4.75 trillion, who directly employ over 6 million people (RBA 2018). This includes all major brands and contractors, from Samsung to Foxconn, and companies from sectors where electronics are becoming increasingly integrated, such as Ford, Hasbro and Wal-Mart.
The RBA acts as a ‘regulator’ largely through a common Code of Conduct (CoC) for members, a set of standards on social, environmental and ethical issues in the supply chain. In addition, it provides members with training and assessment tools, and runs taskforces and working groups on thematic issues (e.g. chemical management) which go beyond the CoC’s requirements. Participation in these is voluntary, intending to create a ‘race to the top’ by being as inclusive as possible to companies at different levels, showcasing best practices, and pushing for ‘continuous improvement’ from members (Interview, RBA 2018).
“Members are at very different places, some just getting started on sustainability and need hand-holding and training. But others are in much more sophisticated place, they have the dedicated resources, staff and time to do more. Companies come to us to understand these issues and we create spaces where they can engage with peers and competitors in a safe environment… and there’s also a brand benefits to be part of this” (ibid)
