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Circular Economy and Supply Chain Excellence

Human Rights in Supply Chain

We have a long-standing commitment to uphold and respect the human rights of all people, wherever we operate, including those who work in our supply chain.

Cisco has a longstanding commitment to uphold and respect human rights for all people. We strive to identify and manage our human rights impacts, mitigate risks, and maximize opportunities for human rights to flourish. We take human rights issues very seriously, and we conduct due diligence consistent with our Global Human Rights Policy and the United Nations Guiding Principles on Business and Human Rights (UNGPs).

Cisco requires suppliers to comply with the Responsible Business Alliance (RBA) Code of Conduct as a condition of doing business with us. By adopting the RBA Code as our own Cisco Supplier Code of Conduct, we set standards and expectations for labor, health and safety, environment, ethics, and management systems that are consistent across the electronics industry supply chain. The Code prohibits the use of forced labor and requires suppliers to flow down these requirements to next-tier suppliers and within their supply chains.

Cisco regularly conducts due diligence of suppliers around the world to assess compliance with the Code using audits and assessments. Audits are conducted onsite using certified independent third-party auditors specifically trained in social auditing to the Code. We outline our due diligence processes in our Modern Slavery Statement and annually publish results of our actions to identify, mitigate and remedy nonconformances to our Code, including forced labor nonconformances, in our Corporate Social Responsibility report.

When we become aware of a potential violation of our Supplier Code of Conduct or Supplier Ethics Policy, we take action to investigate, assess, mitigate and remedy human rights impacts. Some concrete examples of actions we have taken are described in our latest Corporate Social Responsibility report. If we are not able to satisfactorily address an issue with a supplier, we may terminate the supplier relationship.

In addition to exercising leverage directly with our suppliers, we also collaborate with industry peers through the RBA and its Responsible Labor Initiative, a multi-industry, multi-stakeholder initiative focused on ensuring the rights of workers vulnerable to forced labor. Our participation in these industry initiatives helps drive consistent expectations for due diligence and remediation, as appropriate, across the industry.

For further detail, our Global Human Rights Policy and Code of Business Conduct guide how Cisco operates while our Supplier Ethics Policy and Supplier Code of Conduct reflect our pledge to uphold the human rights of people who work in our supply chain.

In alignment with the UNGP, we completed a Human Rights Impact Assessment (HRIA) in FY17. This identified salient issues (see graphic) that we have focused on for the last three years and will continue to address moving forward.

Our progress on Human Rights Impact
Assessment (HRIA) commitments

Expand our scope

  • Grew responsible minerals program to include cobalt and other conflict-affected and high-risk areas (CAHRAs)
  • Incorporated logistics suppliers into Supplier Code of Conduct assurance program
  • Extended Supplier Code of Conduct to global services suppliers

Improve our effectiveness

  • Developed Supply Chain Human Rights Governance Committee
  • Delivered Supply Chain Human Rights Training to Cisco employees
  • Leveraged data to improve risk assessments for forced labor and child labor risks
  • Expanded due diligence beyond audits with targeted assessments and spot checks

Engage to learn and influence

  • Developed external stakeholder engagement strategy
  • Partnered within industry at the RBA, RMI, RLI, and CEPN
  • Partnered with one manufacturing site to engage workers in reskilling, including surveying workers on job satisfaction, Future of Work, and providing skills training

We have made progress towards the commitments outlined by the Human Rights Impact Assessment (HRIA) performed in fiscal 2017. Overall, we have improved how we conduct due diligence toward our priorities and how we sense and respond to human rights risks as they evolve over time.

Aligned with our commitments, we conduct due diligence to identify potential impacts through targeted assessments within the supply chain. The Supply Chain Human Rights Governance Committee maintains executive oversight of human rights risks and opportunities within the supply chain. It regularly reviews our progress and results to address priorities including forced labor and mineral supply chain risks. It also allows us to integrate human rights policies and priorities into business operations and garner feedback across functions. The committee includes our Senior Vice President of Supply Chain Operations with other executives representing Global Manufacturing and Logistics, Global Supplier Management, Technology & Quality, Supply Chain Transformation, and Legal.

In fiscal 2020, we launched a human rights training in Supply Chain Operations to raise awareness and educate employees on how they can play a role in helping Cisco to follow through on our human rights commitments. These include employees around the world who manage supplier relationships, identify new sourcing opportunities, or go onsite to assess the quality of products sold, among other functions. Supply chain employees learned how to detect warning signs of serious risks such as forced labor and child labor, report if they suspect violations to Cisco’s standards, and support work to hold suppliers accountable. We reached a 98 percent completion rate among Supply Chain Operations employees. Employees are required to complete this training every two years. An exam at the end of the training determined that employees could effectively demonstrate how factors such as recruitment fees and restrictions on freedom of movement can lead to forced labor conditions. No supply chain related human rights concerns were reported through EthicsLine during fiscal 2020.

Upholding workers’ rights to be free from forced labor of any kind has long been part of our Supplier Code of Conduct. In addition, we uphold the RBA Definition of Fees to minimize the risk of forced labor through debt bondage in all the geographies where we operate. The policy requires that workers do not pay fees to obtain, maintain, or leave employment, even if permissible by local law. Upholding workers’ freedom of movement is also a key aspect that is supported by this work. Identifying risks of forced labor is embedded within all the audits we conduct in our supply chain. Cisco requires suppliers to mitigate risks that could potentially lead to forced labor conditions and remediate impacts to affected workers. You can read an overview of Cisco’s process for addressing forced labor risks in our Statement on the Prevention of Slavery and Human Trafficking.

During fiscal 2020, supplier audits continued to uncover nonconformities to our Code of Conduct for Freely Chosen Employment. These indicated risks for forced labor or bonded labor. In a few cases, workers had paid one-time health examination fees of less than 5 percent of their monthly salary. Cisco’s audits also uncovered cases of excessive recruitment fees charged to foreign migrant workers.

Whenever we discover that workers have paid fees, we work with the supplier to immediately stop this practice and take actions to remediate affected workers. As part of corrective actions, we drive suppliers to adopt comprehensive “no fees” policies and procedures and to prevent future workers from paying fees during the recruitment process. When these policies are adjusted, workers are trained and informed about the “no fee” policies in a language they can understand. This training is also integrated into the recruitment process for future workers. As part of our remediation work, Cisco oversaw suppliers reimburse more than $500,000 in health check and recruitment fees to more than 6,000 workers during fiscal 2020. Four workers were ensured access to their passports after the audit revealed they did not have access to them. Cisco ensured suppliers enacted policies and procedures to have workers keep their own passports and have access to a safe and secure place for storing them.

In addition to audits, we conducted a targeted risk assessment of manufacturing and components suppliers who employ vulnerable populations such as migrant workers, young workers, and student workers. Based on the results, we engaged suppliers outside our normal audit processes to assess if supplier policies and practices met our expectations. We expect all suppliers to have processes to implement “no fees” policies, conduct due diligence on their labor agents, and ensure Freedom of Movement for workers. Most of the suppliers we assessed had policies and procedures to prevent risks of forced labor and bonded labor. However, this targeted effort effectively identified four suppliers that required further onsite assessment. One assessment found that workers paid application and service processing fees of less than 50 percent of their monthly salary. These practices were addressed, and workers were repaid during fiscal 2020. Assessments of two of the identified suppliers had to be postponed due to the pandemic; these are planned for fiscal 2021. Another assessment carried out with the fourth supplier identified risks to young workers, further described below in the Protecting Young Workers section.

Our learnings also prompted us to conduct deeper due diligence into high-risk areas where recruitment and labor agent fees are legal and foreign migrant workers could be subject to them. This further turned up additional risks for further investigation and assessment. While our abilities to investigate onsite were hampered by the pandemic, we are continuing to engage suppliers remotely and reschedule onsite assessments as soon as practicable.

In fiscal 2020, we continued working with small set of component suppliers to better understand our next-tier supply base and to drive our standards deeper into the supply chain. We helped improve our suppliers’ abilities to develop effective corrective action plans with their next-tier suppliers. And, we monitored their abilities to close nonconformances with their suppliers. For example, Cisco worked with a supplier whose audit with a next-tier supplier turned up a Priority Freely Chosen Employment nonconformance. More than 30 workers had paid health check fees equivalent to less than 2 percent of their monthly salary. Cisco was able to work with its direct supplier to ensure the next-tier supplier reimbursed fees to workers in a timely manner and implemented standard policies and procedures. At our request, the supplier conducted a third-party closure audit. This audit validated that reimbursements were completed and that the nonconformance could be closed. Cisco aims to continue this work to promote conformance to the RBA Code in lower tiers of the supply chain where there is greater risk to workers and the environment.

Cisco continues to leverage the Responsible Labor Initiative (RLI) as a workgroup to share and learn best practices. Working with the RBA and with other RBA members remains an important aspect of addressing serious human rights issues. During fiscal 2020, Cisco participated at the RLI to update the Definition of Fees to improve clarity and its ability to serve as a robust policy for preventing forced labor through debt bondage.

Protecting the rights of young workers within Cisco’s supply chain is an important priority. Our standards for protecting workers under the age of 18, including the types of work they cannot perform, are outlined in the Juvenile Labor Policy and Expectations. In fiscal 2020, Cisco did not observe any cases of underage child labor. However, audits identified suppliers who did not have comprehensive enough identity document verification processes in place to prevent underage child labor directly or indirectly through contractors. In these cases, Cisco worked with suppliers to close gaps in their management systems to prevent risks of child labor.

One supplier was prioritized for onsite assessment outside of our normal audit processes. The assessment uncovered five young workers who had been working overtime and had not received risk evaluations or health exams as part of their employment. Cisco engaged with the supplier to immediately stop the practices that posed health risks to workers and is actively working to ensure young worker treatment is aligned to our expectations.

Cisco products, like most electronics, contain tantalum, tin, tungsten, and gold. These minerals, known as 3TG, are mined around the world. 3TG are sometimes known as “conflict minerals” because of concerns about their mining and sale contributing to armed conflict and human rights abuses in the Democratic Republic of the Congo (DRC).

Cisco does not procure minerals directly from mines or the smelters or refiners (SORs) that process them. However, we are committed to upholding and respecting human rights for all people, including those who work in the earliest parts of our supply chain. Our goal is to work collaboratively with suppliers to source minerals consistent with our values around human rights, business ethics, labor, health and safety practices, and environmental responsibility. This approach includes sourcing responsibly from conflict-affected and high-risk areas (CAHRAs). Our full commitment, informed by the United Nations Guiding Principles on Business and Human Rights (UNGPs), is captured in our Responsible Minerals Policy. Our Conflict Minerals Disclosure and Report, published in 2020, describes in detail how our due diligence activities align to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.

Industry collaboration

Because Cisco does not buy 3TG directly from SORs, we collaborate with our suppliers to conduct due diligence for responsible mineral sourcing. We also work across our industry to develop tools and practices to support due diligence. We use the Responsible Minerals Initiative (RMI) Conflict Minerals Reporting Template (CMRT) to survey suppliers, review SORs they report, and request them to work through their supply chains to shift sourcing to SORs conformant with RMI’s Responsible Minerals Assurance Process (RMAP).

After Cisco analyzes supplier CMRTs, we address any identified risks. This includes working with suppliers to remove non-RMAP-conformant SORs from the supply chain. We set the highest priority on SORs that meet Cisco’s definition of high risk. Through the Supply Chain Human Rights Governance Committee, we regularly notify Cisco’s supply chain leadership of our progress. If a supplier does not attempt to comply with our Responsible Minerals Policy, we may escalate the supplier to global supply chain management and possibly remove them from our supply chain. For more information, see the table below.

In fiscal 2020, Cisco continued collaborating with peer companies and other stakeholders through active participation in the Responsible Minerals Initiative (RMI). We were involved in the RMI Smelter Engagement Team, which works to increase participation in the Responsible Minerals Assurance Process (RMAP); the RMI Mining Engagement Team, which works with upstream stakeholders to increase the quantity and quality of data that enables downstream companies to identify and mitigate risks; and the RMI Artisanal and Small-scale Mining (ASM) Team, which is focused on addressing the unique risks and opportunities in the ASM sector. We anticipate deepening our involvement in these groups and engaging on other issues relevant to our minerals sourcing strategy.

In March 2020, Cisco became a member of the European Partnership for Responsible Minerals (EPRM), a multi-stakeholder partnership designed to increase the number of mines that adopt responsible mining practices in CAHRAs. We look forward to participating in this community and working to advance its in-region projects.

Beyond “conflict minerals”

Demand is increasing for accountability and transparency regarding human rights in global mineral supply chains. In fiscal 2020, Cisco initiated our first Cobalt Supplier Survey, using the RMI’s Cobalt Reporting Template (CRT), to survey lithium-ion battery suppliers. 100 percent of suppliers responded to the survey and the results are detailed below. Like the identified 3TG smelters and refiners, Cisco uses these results to conduct due diligence throughout the year to monitor risks and increase the overall conformance rate. In addition, Cisco conducted its first analysis of CAHRAs to understand the social and environmental impacts of mineral sourcing outside of the Great Lakes Region in central Africa. In part to address the challenges of due diligence for CAHRAs, Cisco continued its financial support of the RMI’s Upstream Due Diligence Smelter Fund. Our goals with this contribution are to:

  • Support smelters making the transition to broader due diligence requirements
  • Promote the adoption of RMAP assessment protocols beyond central Africa and into other CAHRAs
  • Offset the due diligence cost of sourcing responsibly from CAHRAs and support peaceful economic activity in those regions
  Calendar year 2019 due diligence results Previous percentage conformant or active by year
Minerals Total smelters and refiners by mineral Number of conformant or active Percentage of conformant or active 2018 2017 2016
3TG MineralsTantalum Calendar year 2019 due diligence resultsTotal smelters and refiners by mineral38 Number of conformant or active38 Percentage of conformant or active100% Previous percentage conformant or active by year2018: 100% 2017: 98% 2016: 100%
MineralsTin Calendar year 2019 due diligence resultsTotal smelters and refiners by mineral56 Number of conformant or active47 Percentage of conformant or active84% Previous percentage conformant or active by year2018: 90% 2017: 91% 2016: 91%
MineralsTungsten Calendar year 2019 due diligence resultsTotal smelters and refiners by mineral47 Number of conformant or active45 Percentage of conformant or active96% Previous percentage conformant or active by year2018: 95% 2017: 93% 2016: 91%
MineralsGold Calendar year 2019 due diligence resultsTotal smelters and refiners by mineral154 Number of conformant or active108 Percentage of conformant or active70% Previous percentage conformant or active by year2018: 69% 2017: 73% 2016: 75%
Other MineralsCobalt Calendar year 2019 due diligence resultsTotal smelters and refiners by mineral16 Number of conformant or active12 Percentage of conformant or active75% Previous percentage conformant or active by year2018: N/A 2017: N/A 2016: N/A

Advancing transparency through the supply chain

Cisco recognizes a need to build upon current industry standards and increase the accuracy with which downstream companies report on the origin of their materials. As a contributor to RMI’s blockchain working group, we are exploring opportunities to leverage blockchain technology to provide enhanced transparency and trust. This includes valid data on the extraction, processing, and transportation of 3TG materials in Cisco products and the ability to share the collected data across the various actors in the supply chain. Since 2018, Cisco has worked with industry peers and large-scale mining companies to design and test traceability prototypes to learn how data generated in the mines at the start of the supply chain can support downstream companies to execute their responsible sourcing strategies. We also aim to understand how the value of that data can be returned to mining communities and drive peaceful economic development.

Providing workers with safe working conditions is part of our human rights commitment and priorities. We continue to see suppliers struggle with maintaining effective health and safety management systems, as we’ve seen in audit results.

Cisco continued its membership in the Clean Electronics Production Network (CEPN). In fiscal 2020, we piloted CEPN’s Qualitative Exposure Assessment (QEA) tool with select component suppliers to identify what controls are in place to address chemical exposure risks. We also conducted surveys with suppliers to better understand chemicals they may be using in production. With the information we received, we prioritized suppliers for deeper engagement and capability building efforts. COVID-19 affected when we were able to start this work, so we are continuing to engage suppliers through fiscal 2021.

Cisco is also working to enable employees who regularly visit supplier factories to identify health and safety risks to workers. As part of the Supply Chain Human Rights training, employees learned to identify and report key health and safety risks such as the lack of PPE and locked or blocked emergency exit pathways. We also worked to pilot an onsite spot check initiative with a select number of Cisco employees. Ten engineers were trained to check for protocols onsite regarding fire safety and egress, chemical management, and reasonable accommodations for pregnant and nursing mothers. Plans to expand this work further were put on hold due to the pandemic. We will seek to resume when feasible.

Working hours and days of rest continues to be a chronic issue in the electronics industry supply chain and our most frequent audit nonconformance category. Cisco works with suppliers to thoroughly uncover root causes during the CAP review process, develop changes to workforce management systems, and monitor long-term improvement plans. As we drive progress, we consider the time it takes suppliers to:

  • Recruit new workers to reduce the total workforce’s average working hours
  • Cross-train and license workers so they can rotate to roles with workforce shortages

Cisco tracks progress of suppliers with priority nonconformances monthly until the nonconformance is downgraded to a major nonconformance. Before determining a nonconformance as ready to close, Cisco conducts a document review of at least three months of average working hours data. At the onset of the COVID-19 pandemic, we engaged suppliers with existing working hours non-conformances to assess their abilities to keep working hours within reasonable limits. Suppliers are required to ensure overtime is voluntary and to monitor working hours to avoid stress and overwork for workers. They are also required to document recovery plans to control working hours if affected by the pandemic. We will continue to monitor this issue as the pandemic evolves. Read more about how we engaged suppliers to protect workers during the COVID-19 pandemic.

Cisco has been monitoring how technologies such as automation, IoT, and artificial intelligence can impact the global workforce. With this in mind, we collaborated with a manufacturing partner to determine how we could build a more resilient workforce ready to address the future of manufacturing. Reflecting our purpose to power an inclusive future, we created new educational and professional development opportunities for workers. In fiscal 2020, we conducted a pilot leveraging Cisco Networking Academy to train production workers with new IT skills. Workers without previous knowledge or experience received training in cybersecurity. Overall, the training was well-received by workers. Workers reported increased confidence in identifying techniques used by cyber criminals, and expressed interest in taking additional courses. We are continuing this collaboration in fiscal 2021 with a larger group of workers and course materials.

During fiscal 2020, we worked with a business and human rights consultancy to develop a stakeholder engagement strategy that could help support our supply chain human rights priorities. This work had a specific emphasis on how we can better incorporate the rightsholder perspective into our work. We believe by incorporating this perspective, we can have a better sense on whether our activities will make the impact we intend. Developing this strategy is a first step to better leveraging stakeholder perspectives to continuously monitor our progress against the UNGPs.