Fairphone developing world's first ethical smartphone

Dutch-based enterprise, Fairphone, is developing the world's first ethical smartphone as it looks to challenge our ignorance in the way smartphones are made, from the social and environmental impact of the supply chain. As it develops the smartphone, it will give its community of customers regular social media updates about how it is made, like a "storytelling platform", to expose the ills of the electronics supply chain it encounters. Fairphone's success so far reveals there is a market for customers prepared to pay for more ethical products.

For many people, smartphones are the first thing we see in the morning and the last thing we see at night. Yet despite our intimate relationship with these devices, we tend to know very little about how they are made—which is ironic, considering they put the world’s knowledge at our fingertips.

A small Dutch enterprise called Fairphone wants to challenge our ethical ignorance of the way our smartphones get made. The 40-person team is shining a light on the huge social and environmental impact of the smartphone supply chain—from the mines of the Democratic Republic of Congo to the factories of China and the e-waste slums of Ghana—by building an ethical smartphone itself.

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The company’s smartphone serves as “storytelling platform” to expose the ills of the electronics supply chain.

The company’s smartphone serves as “storytelling platform” to expose the ills of the electronics supply chain, Bas van Abel, founder and CEO of Fairphone, tells Quartz. With transparency as an underlying principle, Fairphone gives its community of customers regular social-media updates about how the product is made. The company also flags any problems it encounters, such as finding a suitable factory that can ethically manufacture a relatively small run of devices.

“By making it from scratch, we might be able to understand why things are the way they are, and we might also find solutions to them,” van Abel says.

Conflict minerals and sweatshop conditions

Although Fairphone’s customer base is modest compared to that of major tech brands, it’s built up a devoted following. The company, which was founded in 2013, sold 60,000 units of its first device and is now shipping more than 24,000 of its latest device, the Fairphone 2. The phone is currently only available in Europe, with Germany as its largest market. Priced at €525 ($570), Fairphone breaks down the costs that lead to that final sum, including the price of materials, labor, taxes, and margins.

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Fairphone’s success suggests that there are concerned customers prepared to vote for more ethical electronics with their wallets. Consumers have already made significant inroads in the food, cosmetics and clothing industries by agitating for fair trade. But the smartphone supply chain is long, complex, and shrouded in opacity, all of which has contributed to a general ignorance about the environmental and human-rights issues involved in production.

Minerals used in smartphones are typically mined in eastern Congo and linked to a brutal conflict.

Each smartphone is made up of about 15,000 components produced in different factories around the world. About 40 different minerals—including gold, tantalum, tin, and tungsten—are used to produce smartphones. These are typically mined in eastern Congo and linked to a brutal conflict. Armed groups fight to control many of the mines, using the profits from trading and smuggling minerals to fund further violent activity that devastates the lives of civilians.

Another big challenge in the quest to make an ethical smartphone is ensuring fair and safe working conditions in factories in China and other parts of Asia, where the vast majority of devices are assembled. Recent years have seen numerous investigations into factories’ appalling conditions, from The New York Times’s probe into Foxconn to the BBC’s undercover exposé of Apple. Problems in the region include low pay and sweatshop conditions. Exhausted factory workers endure long shifts without breaks, compromising their safety. With high employee turnover, non-unionized workers have little muscle to exercise their labor rights. In South Korea, suicides, deaths, and illnesses linked to Samsung factories have sparked ongoing protests at the company’s headquarters in Seoul.

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“So many people are so attached to their ‘cool gadgets’ and those feelings are shamelessly played on by advertising and marketing.”

“The fact that workers are still paid a pittance while the brands rake in super profits leads to the huge rate of turnover and a lack of investment in workforce development,” Ted Smith, coordinator at the International Campaign for Responsible Technology, tells Quartz. He says that while consumer backlash has led companies such as Nike to address workers’ rights issues, “it’s a bit harder in the tech field.”

“So many people are so attached to their ‘cool gadgets’ and those feelings are shamelessly played on by all of the advertising and marketing aimed at the young people,” Smith says.

When companies choose to stay in the dark

Legislation has attempted to address these ethical issues in recent years. In 2010, the US Congress passed a landmark law known as Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. It required all US-listed companies that sourced from the Congo to determine if their purchases benefited armed groups. There is similar legislation in East Africa, while the European Parliament recently voted in favor of a new law that will require European companies to source materials responsibly. China also recently issued due diligence guidelines for mineral supply chains.

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But problems persist despite these bills. “Legislation is only as good as the way in which it’s implemented,” Sophia Pickles, a senior campaigner at Global Witness, tells Quartz. Global Witness is a London-based NGO that investigates natural resources and corruption, and Pickles specializes in issues relating to the Democratic Republic of Congo. “The implementation we are seeing is patchy,” she says.

A recent Al Jazeera investigation cast doubt on Intel’s well-publicized claims that its microchips are conflict-free.

A joint Global Witness and Amnesty International report published in April of 2015 found that out of 100 companies sourcing minerals from the Congo, 79 failed to report their supply chain adequately last year. Meanwhile, another Al Jazeera investigation from November cast doubt on Intel’s well-publicized claims that its microchips are conflict-free.

Companies are struggling to find out what is going on in their supply chains in part because it is a new exercise for them, according to Pickles. Some companies at the consumer end of the supply chain only audit as far as the smelter, for example. The smelter converts mineral ore to metal, after which it becomes harder to trace minerals’ origins.

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And even when companies do receive conflict-free certification for their minerals, which are also mined in Colombia, Indonesia, and Afghanistan, it’s hard to guarantee the minerals were extracted safely and without child labor.

Fairer alternatives

To make an ethical smartphone, Fairphone decided it would need to begin its work at the mines themselves, undertaking field work to report on the labor conditions. Fairphone decided to certify its minerals in stages, first sourcing conflict-free tin and tantalum from the Congo. Now it is working toward sourcing conflict-free tungsten and gold. Although the device is not yet completely conflict-free, Fairphone is heading in the right direction, says Pickles. “It’s the kind of thinking that all companies should be engaged in,” she says.

Fairphone teamed up with its manufacturing partners to create a welfare fund for factory workers who choose how the money is spent.

Meanwhile, despite longstanding issues with workers’ rights in Chinese factories, Fairphone has realized it would not be economically viable to assemble its device elsewhere, according to van Abel. So Fairphone teamed up with its manufacturing partners to create a welfare fund for factory workers. Workers choose how the money is spent, including such uses as bonuses, professional training, and leisure activities. For the Fairphone 1, Fairphone and its manufacturer Guohong agreed to each invest $2.50 into the fund for every device sold, with the total fund reaching $300,000. (The workers mainly opted to put the money toward bonus payments.)

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Fairphone is also easing the pressure on production at its factory. During busy times such as product launches and the holidays, big tech companies often hire a huge workforce of temps, assembling devices under pressurized conditions. When Fairphone ran into production problems with its Fairphone 2, it instead informed customers that there was going to be a delay. This meant Fairphone did not have to draft temps to work punishing hours in order to get the device out in time.

Being small obviously has its advantages. Unlike other smartphone manufacturers, Fairphone is not gunning to become market leader, which means it’s in a position to announce delays without worrying too much about losing market share. It’s also making an effort to build longer-lasting phones. While Apple devices are glued together, making them hard to repair, the Fairphone 2 is modular. That means it can easily be taken apart, repaired, or upgraded by owners. The device may not be as sleek as others on the market, but it aims to be more robust, with a lifespan beyond the average two to three years. All this should help the company to produce fewer phones, reducing its environmental impact. Fairphone also plans to use recycled parts to reduce its dependence on environmental resources and e-waste.

Ethics as a work in progress

“If demand spiked significantly, Fairphone would face the challenge of how to stay true to its ethics while filling large orders.”

One way Fairphone could achieve its aims would be to snag a top customer. The US government is the largest purchaser of electronics in the world—an order from such an industry leader would be huge, Smith suggests. But if demand spiked significantly, Fairphone would also face the challenge of how to stay true to its ethics while filling large orders.

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It’s a constant internal debate, says van Abel. “As long as you can explain it to customers, and be open and transparent, it’s up to them if they decide to buy it or not.”

It’s clear that Fairphone is navigating a convoluted moral maze. While it’s not afraid refer to itself as a work in progress, the company’s name raises eyebrows among some critics.

“We chose the word Fairphone as a paradox in itself to make people think, ‘Tell me what is wrong about phones?’” says van Abel. “It’s more about a starting point, it’s an ambition and vision we are working for.”

In this way, van Abel hopes to remodel the relationship between production and consumption in the modern age.

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“The biggest impact we would like to have is creating change in economic thinking and I believe starts with how consumers think,” he says. “If we can change the way consumerism is now, and consumption in general, that is where the big gain is.”