Human rights in the 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.
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 quantify our human rights impacts, mitigate risks, and maximize opportunity for people and communities. Cisco dedication to human rights is embedded in our due diligence system, which is consistent with our Global Human Rights Policy, the United Nations Guiding Principles on Business and Human Rights (UNGPs), and the OECD Due Diligence Guidelines for Responsible Business Conduct.
Cisco requires that suppliers comply with the Responsible Business Alliance (RBA) Code of Conduct in order to do business with us. Among other provisions, the Code prohibits the use of forced labor and requires suppliers to cascade these requirements to next-tier suppliers and within their own supply chains.
Cisco outlines our due diligence processes in this ESG hub and our Modern Slavery Statement, and annually publishes results of our actions to identify, mitigate, and remedy nonconformances to our Code, including forced labor nonconformances, in our Supplier Audit Results. 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 below. 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 and Responsible Minerals Initiative, which are multiindustry, multistakeholder initiatives promoting the rights of vulnerable workers in global supply chains. Our participation in these industry initiatives helps drive consistent expectations for due diligence and remediation, as appropriate, across the industry.
Cisco also takes steps to educate our supply chain workforce about the importance of human rights via a mandatory training module that raises awareness and educates employees on how they can play a role in helping Cisco to follow through on our human rights commitments. Through content and an exam, supply chain employees learn about key components of the Supplier Code of Conduct and how they can hold suppliers accountable to this policy. They also learn how to detect warning signs of serious risks such as forced labor and child labor and how to report concerns if they suspect violations to Cisco's policies.
For further detail, our Global Human Rights Policy, Code of Business Conduct, and Responsible Minerals Policy 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.
Upholding workers' rights to be free from forced labor of any kind is embedded within our Supplier Code of Conduct. Our Supplier Code of Conduct aligns with the ILO Indicators of Forced Labour so that when supplier sites are assessed for Code conformance, indicators such as deception during recruitment, identity document retention, wage withholding, debt bondage, abusive conditions, and restriction of movement are examined. To minimize the risk of forced labor through debt bondage, we uphold the RBA Definition of Fees policy in all the geographies where we operate. The Definition of Fees requires that workers do not pay fees to obtain, maintain, or leave employment, even if permissible by local law. Aligned to the UNGPs, Cisco requires suppliers to mitigate risks that could potentially lead to forced labor conditions and remediate impacts to affected workers. 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 2022, we continued to see supplier audits uncover nonconformities to our Supplier Code of Conduct expectation for Freely Chosen Employment. These nonconformities indicated risks for forced labor or bonded labor. These supplier nonconformances arose if any workers paid fees related to recruitment, such as small one-time fees for health examinations, or larger recruitment fees. We continue to see the majority of Freely Chosen Employment cases reflect instances where workers paid one-time health examination fees of less than 5 percent of their monthly salary and were reimbursed after commencement of employment. Our teams have worked with suppliers to develop models in which employers pay healthcare providers for health examinations, eliminating the need for workers to be reimbursed.
In countries where it is legal for recruiters to charge fees to foreign migrant workers prior to departing their home country and upon arrival, we have continued to identify risks of bonded labor, a type of forced labor. In these instances, foreign migrant workers paid excessive recruitment fees equivalent to a month of their gross wages or more. Workers become bonded by debt when they are forced to work in order to repay loans or excessive fees to labor brokers. As part of our normal processes, we take two main corrective actions to address bonded labor risks: drive suppliers to absorb recruitment fees previously passed onto workers and directly remediate and reimburse affected workers. Given that recruitment fees are legal in some countries, it can take time to drive resolution with suppliers, and our efforts are ongoing.
Upon discovery of the practice of charging prohibited fees, we work with the supplier to investigate further: identify fees workers may have paid to labor agents pre-departure and upon arrival, account for recurring fees deducted from their paychecks, and drive suppliers to hold dialogue with workers regarding fees that may have been paid to other intermediaries or for travel. A thorough investigation is important in helping the supplier determine the actual cost of recruitment moving forward and the amounts to be reimbursed to workers. As part of corrective actions, suppliers must adopt comprehensive "no fees" policies and procedures 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.
In addition to RBA audits, we conduct targeted surveys of suppliers who employ vulnerable populations, such as migrant or young workers. We select sites for this targeted engagement based on risk. For example, if the supplier is located in a country that legally permits recruitment fees such as Taiwan or Malaysia, and the suppliers' self-assessment questionnaire indicates foreign migrant workers onsite, and we do not have a current or planned RBA audit for that site, then these sites receive an additional survey asking them about their recruitment practices and forced labor due diligence. Even if the practice of charging recruitment fees is permitted under local law, we make it clear to suppliers that we expect them to have processes to implement "no fees" policies, conduct due diligence on their labor agents, and ensure Freedom of Movement for workers.
In our fiscal 2022 engagement, we engaged six sites due to foreign migrant worker or dispatch worker risk. Four of the six sites were found conformant, and two required further engagement to meet conformance. One lacked an anonymous grievance mechanism, which we worked with the supplier to implement. The other was found to have excessive working hours and insufficient emergency preparedness programs in place. We have opened Corrective Action Plans for those findings, which are currently in progress.
In fiscal 2022, we drove more than $1.7 million in fee reimbursements to 2,817 workers. This included reimbursement of smaller health check fees in mainland China and the Philippines as well as recruitment fees occurring in Taiwan, Malaysia, Japan, and Singapore.
In addition to the above, during Cisco's fiscal 2022, Cisco partnered with the RBA and commissioned RBA Advisory Services for four suppliers in Taiwan that were allowing foreign migrant workers to pay recruitment fees. On our behalf, the RBA conducts interviews with relevant labor agencies in both origin and destination countries, as well as with onsite human resources management teams, and with affected workers. These interviews help determine how much and at what point during the migration journey workers paid fees, in addition to uncovering conditions that workers were subjected to during the recruitment process. Next, the suppliers work with RBA personnel to develop and implement a reimbursement plan. At the end of this process, a third-party audit is conducted to validate that the affected workers were adequately remedied.
Within the past year, our participation in the RBA Responsible Labor Initiative (RLI) supported our ability to address forced labor risks with suppliers. Cisco sponsored five suppliers to attend RLI Forced Labor training seminars. Our team leveraged these trainings to guide suppliers to conduct thorough fee investigations, equipping them with tools and resources such as fee checklists and guidance questionnaires. The Labor Migration Corridor Database assisted in helping suppliers identify fees workers could have paid along their journey.
Protecting the rights of young workers within Cisco's supply chain is an important priority. Our standards for protecting workers between the ages of 16 and 18, in jurisdictions where individuals are legally permitted to work under the age of 18, include the types of work they cannot perform and are outlined in the Juvenile Labor Policy and Expectations. In fiscal 2022, Cisco did not observe any cases of underage child labor (workers aged 15 and below). However, Cisco identified some suppliers in which young workers (under 18) were assigned to work overtime or the night shift, and some cases where suppliers had inadequate policies on child labor avoidance and remediation (learn more about our audits on our supply chain case studies page). In such cases, Cisco engages with the supplier to stop practices that pose health risks to workers and adjust policy or procedures so that workers are managed in a manner aligned to our expectations.
Sourcing minerals involves risks on many fronts, including health and safety, forced labor and child labor, environmental degradation, and influence on regional conflicts. Cisco is aware of those risks and has put a robust due diligence process into place to source minerals, such as tantalum, tin, tungsten, gold (3TG), and cobalt, without contributing to armed conflict and human rights abuses.
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). Cisco does not directly procure minerals from mines, or the smelters or refiners that process them, and therefore we rely on third-party standards such as the Responsible Minerals Assurance Process (RMAP) or other cross-recognized standards to source minerals ethically and responsibly. Cisco uses this determination as part of our risk-based assessment to determine whether sources are low-risk (previously referred to by the industry as conflict-free).
Our full commitment, informed by the United Nations Guiding Principles on Business and Human Rights (UNGPs), is captured in our Responsible Minerals Policy. Our calendar year 2021 Conflict Minerals Report, published in May 2022, 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. The report also provides details of our 2021 results.1
1 Conflict minerals are defined by the United States Securities and Exchange Commission in Section 1502 of the Dodd-Frank Act as cassiterite, columbite-tantalite, gold, wolframite, or their derivatives, or any other minerals or their derivatives determined by the Secretary of State to be financing conflict in the Covered Countries, which include the Democratic Republic of the Congo (DRC) or an adjoining country.
Since Cisco does not buy 3TG directly from smelters or refiners (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 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. In calendar year 2021, 83 percent of the 3TG SORs reported by our in-scope suppliers were conformant or active in a third-party audit program. An additional 8 percent processed 100 percent recycled content or sourced from outside the Democratic Republic of the Congo (DRC) and the Great Lakes Region. Additional 3TG results are included in the calendar year 2021 Conflict Minerals Report.
In fiscal 2022, Cisco continued collaborating with peer companies and other stakeholders through active participation in the RMI. We were involved in the RMI Smelter Engagement Team, which works to increase participation in the RMAP; the RMI Mining Engagement Team, which seeks to identify ways to share data from upstream mining companies with downstream manufacturers; and the RMI Artisanal and Small-scale Mining (ASM) Team, which focuses on driving performance improvements and mitigating the risks associated with artisanal and small-scale mining. We anticipate deepening our involvement in these groups and engaging on other issues relevant to our minerals sourcing strategy.
Again in fiscal 2022, Cisco contributed financially to the RMI's Audit Fund. This fund is an important tool for promoting entry into the RMAP program. Our intention with our contribution is to encourage a high level of SOR participation in the RMAP and to offset the due diligence cost of sourcing responsibly.
Cisco is also a member of the European Partnership for Responsible Minerals (EPRM), a multistakeholder partnership designed to increase the number of mines that adopt responsible mining practices in CAHRAs. Cisco's involvement as a member of the supply chain pillar included participation in the Upstream Working Group. Over the last year, this working group has been conducting research to determine how the organization can best support in-region projects that advance responsible mineral sourcing.
One EPRM-funded project that Cisco has supported directly is Scalable Trade in Artisanal Gold (STAG), which aids miners in Burkina Faso and their efforts to improve their livelihoods through mineral resources. STAG aims to establish a commercially viable pathway to market for responsibly sourced artisanal gold. The first step in that path was achieved, with the creation of a standard for responsible mining at the participating mine sites that ensures gold is extracted in accordance with industry's expectations for protecting human rights and the environment. Following review by partners RESOLVE and RMI, the standard was extended to incorporate local and international criteria. The implementation of the standard will be recognized by due diligence systems like RMAP as a way to validate ASM gold sources, which will enable these ASM miners to gain access to the global market for responsibly mined gold.
STAG is also taking steps toward establishing a field gold trading operation in the Dano region of Burkina Faso that will provide ASM miners with access to international responsible gold buying markets. The team from partner Artisanal Gold Council (AGC) completed two baseline assessments for ASM supply chains at the project sites and established a gold price database for the Dano region. These assessments will inform the development of incentive models to encourage ASM miners to engage with formal markets.
In addition to providing financial support, Cisco is participating in STAG's Downstream Progressive Due Diligence Lab, which promotes ASM sourcing and due diligence among midstream and downstream actors in the supply chain. We are proud to be part of this project alongside EPRM, RMI, RESOLVE, Artisanal Gold Council, and AG Sarl.
There is increasing focus on accountability and transparency regarding human rights in global mineral supply chains. In fiscal 2022, Cisco continued to use the RMI's Cobalt Reporting Template (CRT), to conduct a Cobalt Supplier Survey of lithium-ion battery suppliers. In fiscal 2021, 100 percent of these suppliers responded to the survey. To improve our risk-based approach in fiscal 2022, Cisco expanded the scope to include additional components that may contain cobalt and 67 percent of suppliers responded, and 62 percent of the reported cobalt refiners were in conformance or active to the RMAP standard. Cisco uses these results to conduct due diligence throughout the year to monitor risks and increase the overall RMAP conformance rate. To improve visibility to risks in the cobalt supply chain and increase the supplier response rate for future surveys, we added cobalt to our Responsible Minerals policy and began outreach to these newly in-scope suppliers ahead of the fiscal 2023 campaign. Cisco continues to conduct outreach to non-conformant smelters and refiners to encourage participation in RMAP.
In fiscal 2022, Cisco funded a mine monitoring program, the RCS Global Better Mining program, that provides key ESG insights to artisanal small-scale mining (ASM) organizations and downstream customers. The Better Mining program has improved understanding of working conditions at 48 ASM sites in the DRC and Rwanda. Between April 2021 and March 2022, the Better Mining program identified over 2000 incidents and risks at the mine sites where they operate. The types of incidents include working conditions and safety, environment, security, human rights, and legality risks. The program recommended 1000 corrective action plans that define the best actions to mitigate the identified risks, such as installation of fences, sensitization training, improved signage, and pit safety measures. These actions, which are implemented by the local stakeholders, drive direct improvements at mine sites. Over time, we hope that the data collected from this endeavor will continue to shed light on how to reduce mine site risks and better inform industry groups like the RMI on strategies for making a positive impact for mining communities.
Creating Cisco products can require the use of chemicals, some of which can be hazardous to human health and the environment. In fiscal 2021, Cisco enacted its Chemical Management Expectations for Suppliers, a policy designed to protect workers and the environment from exposure to harmful chemicals.
Cisco is a member of the Clean Electronics Production Network (CEPN) and the Responsible Business Alliance (RBA) Chemical Management Workgroup. As a result, Cisco aligned its policy and due diligence approach to the CEPN Priority Chemicals list. This list mirrors the RBA Industry Focus Process Chemical list.
During fiscal 2022, Cisco continued to examine supplier sites' handling of hazardous chemicals. Cisco had 20 additional supplier sites complete Process Chemical Data Collection (PCDC) surveys. These surveys ask suppliers to identify which chemicals are used to manufacture the components that are included in Cisco products. As part of this process, Cisco and a third-party consulting company assessed the risk of more than 500 chemical products. Then, we worked with suppliers to eliminate or substitute unsafe chemicals with safer alternatives. The PCDC survey revealed that the remaining 17 suppliers were not using any of the nine priority chemicals outlined in its Chemical Management Expectations for Suppliers policy.
In fiscal 2022, Cisco worked with six suppliers to implement safer alternatives and stop using hazardous chemicals like Benzene (71-43-2), n-hexane (110-54-3), n-Propyl Bromide (106-94-5), and Methyl alcohol (67-56-1) in their production, cleaning, and maintenance processes. This work was independent of the PCDC survey.
Elimination and substitution are effective controls that reduce hazards. In alignment with the CEPN's list of Priority Chemicals, Cisco requires suppliers to stop the use of chemical ingredients listed in Table 1 by March 2024. (Source: Chemical Management Expectations for Suppliers)
|Chemical ingredient||CAS number|
|Chemical ingredient: Benzene||CAS number: 71-43-2|
|Chemical ingredient: n-Propyl Bromide (nPB)||CAS number: 106-94-5|
|Chemical ingredient: Methylene Chloride||CAS number: 75-09-2|
|Chemical ingredient: Methanol||CAS number: 67-56-1|
|Chemical ingredient: n-Hexane||CAS number: 110-54-3|
|Chemical ingredient: N-Methyl-Pyrrolidone (NMP)*||CAS number: 872-50-4|
|Chemical ingredient: Tetrachloroethylene||CAS number: 127-18-4|
|Chemical ingredient: Toluene||CAS number: 108-88-3|
|Chemical ingredient: Trichloroethylene||CAS number: 79-01-6|
|Ingredients shall not be used in cleaning agents or solvents during production. Concentrations in mixtures must be below GHS reporting values <0.1% or 1000 ppm.|
|*Conditional use allowed for photoresist stripping|
Suppliers are to eliminate the use of ingredients in Table 1 through effective design or substitute their use with safer alternatives. When substituting chemicals, Cisco encourages suppliers to rely on hazard assessment frameworks such as GreenScreen® for Safer Chemicals and consult databases such as IC2 Hazard Assessment Database to avoid shifting to chemicals with potentially worse hazards.
For this matter, the Cisco Controlled Substances Specification Revision B6 also applies.
We still see disruptions stemming from COVID-19 that impact our supply chain operations. We continue to navigate these challenges and have designed our supply chain to be resilient and responsive in the face of COVID-19. The safety and wellbeing of workers within our supply chain remains of utmost concern.
We are continually looking for new ways to empower supply chain workers as rightsholders and provide them with environments where they can work with dignity. While encouraging workers to provide feedback on their labor conditions has always been part of our Supplier Code of Conduct, effective communication with and among workers became ever more important within the context of the pandemic. Read more about how we respond to worker grievances.
During fiscal 2021, we took steps to better incorporate rightsholder perspectives into our work. By participating in multistakeholder initiatives like EPRM, CEPN, Alliance for Water Stewardship (AWS), and RLI, we can drive collective action to create systemic impact for rightsholders. By partnering with SAI and on projects like STAG, we seek more direct impact that can improve the lives of rightsholders within our supply chains. Through engagement with others, we can learn and share best practices that inform our approaches and improve how effective we are at addressing our human rights priorities. See the table below for more details on who we engage with.
We believe that by working to incorporate rightsholder perspectives into our work, we can have a better chance of making the impact that we intend. 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. During fiscal 2021, we were able to leverage this work to informally consult organizations that were identified through the stakeholder mapping process. We engaged with more than 20 nongovernmental organizations and expert consultants to monitor the trajectory, risks, and opportunities of our existing human rights priorities such as forced labor, worker occupational health and safety, responsible minerals sourcing, and environmental stewardship initiatives. By doing so, we were able to actively adapt our strategies and operations to landscape trends, including within the context of the evolving pandemic. These engagements also supported our abilities to identify and develop approaches to address emerging issues.
In fiscal 2022, Cisco held an internal workshop to strengthen our focus on vulnerable groups and rightsholder engagement for the upcoming fiscal year. The workshop presented opportunities for increased collaboration between the supply chain and the rest of Cisco's operations in order to strengthen our focus on rightsholder consultation and vulnerable groups. What became abundantly clear was that Cisco could improve how it connects its work between the supply chain and the rest of the Cisco enterprise so that rightsholder consultation and attention to vulnerable groups could be better integrated across Cisco's operations. The workshop resulted in a mapping of rightsholders in Cisco's supply chain and a prioritized set of actions that will serve as the basis for further developing our strategy in fiscal 2023.
|Organization:Responsible Business Alliance (RBA)||Engagement areas:Cisco is an original founder and full member of the RBA. We collaborate with peers at the RBA to propagate best practices across the industry and supply chain.|
|Organization:RBA VAP Working Group||Engagement areas:Cisco participates in RBA's VAP Working Group, which comprises member companies who monitor the progress and implementation of the RBA Validated Assessment Program.|
|Organization:CDP||Engagement areas:Cisco participates in CDP's disclosure system to report on our efforts and promote public reporting within the supply chain.|
|Organization:Responsible Minerals Initiative (RMI)||Engagement areas:We actively participate and collaborate with peer companies at RMI to address concerns and develop new solutions for responsibly sourcing minerals.|
|Organization:Responsible Labor Initiative (RLI)||Engagement areas:We actively participate in the RLI, a multistakeholder initiative focused on ensuring the rights of workers vulnerable to forced labor in global supply chains.|
|Organization:Institute of Public and Environmental Affairs (IPE)||Engagement areas:Cisco has an ongoing partnership with IPE to prevent, mitigate, and remediate environmental risks with supplier sites in mainland China.|
|Organization:European Partnership for Responsible Minerals (EPRM)||Engagement areas:We are a member of EPRM, a multistakeholder partnership aimed at increasing the availability of responsibly produced minerals through supporting mine sites, supporting mid- and downstream companies, and strengthening linkages between production and sourcing.|
|Organization:Clean Electronics Production Network (CEPN)||Engagement areas:We are a full member of CEPN, a multistakeholder network with the goal to address workers' exposure to toxic chemicals during electronics manufacturing. We work to develop tools for due diligence and identify best practices to be propagated in the supply chain.|
|Organization:RBA Environmental Sustainability Working Group (ESWG)||Engagement areas:We collaborate with peers at the RBA ESWG to develop tools and disseminate resources to build more sustainable supply chains.|
|Organization:Alliance for Water Stewardship (AWS)||Engagement areas:Cisco has adopted AWS International Water Stewardship Standard for evaluating and driving water stewardship in the supply chain.|
|Organization:RBA Chemical Management Taskforce||Engagement areas:We promote the adoption and dissemination of tools and resources to improve chemical management practices and protect workers from exposure to chemicals in the electronics supply chain.|
|Organization:Scalable Trade for Artisanal Gold (STAG)||Engagement areas:Cisco supports this cross-sector initiative to develop secure and responsible routes for artisanal gold to enter the electronics supply chain. We collaborate with partners to advance mining standards, meet downstream expectations, and improve the livelihoods of artisanal miners.|
|Organization:RBA Indirect Spend Working Group||Engagement areas:Cisco collaborates with other member companies to identify, address, and manage social and environmental risks in the nonmanufacturing and service supply chains.|
Working hours and days of rest continue 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:
Cisco tracks the 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. We engage suppliers with existing working hours nonconformances 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. 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.
At the close of fiscal 2022, Cisco will apply what we learned from mitigating persistent working hours and implement best practices at sites experiencing similar issues during fiscal 2023.