Instead of complaining about phone-makers’ sustainability failings, a group of Dutch campaigners is producing its own rival product

If you can’t beat them, join them, or so they say. And a group of ethical trade campaigners has decided that the best way to understand and communicate about the supply-chain dilemmas facing consumer electronics brands is to enter the market. The idea has taken off quickly, with a crowd-funding campaign that started in May 2013 raising a €3m social business start-up fund from pre-orders in just three weeks.

Thus the Fairphone smartphone was born. It grew out of work done by a Dutch social innovation foundation, the Waag Society. The society’s view was that most consumers have an “alienated relationship” with the products they buy, because they know very little about who makes them or how they are made. By producing its own phone, says Fairphone public engagement manager Roos van de Weerd, Fairphone will create a “storytelling artefact” that will be the basis of a high-impact awareness project on ethical supply chains.

About 13,000 Fairphones have been pre-sold, at €325 (£280) each. Fairphone’s initial production run will be 20,000. The device will be a fully ethical mid-range smartphone. Its mineral content will be guaranteed conflict-free; it will be assembled by workers with fair contracts; and its price includes a levy for safe e-waste recycling. A buyback programme for retired Fairphones is also planned. The phone’s operating system will be open source, and pricing will be transparent – Fairphone will publish a price breakdown.

Van de Weerd says the move into manufacturing will give much more credibility to Fairphone’s campaign work on sustainable and ethical supply chains. “Our objective is not to be the number-one phone-selling company. The objective is still to tell the story and we tell the story through the phone and the impact,” she says. The aim is to “try to be transparent in communication, try to really do something different in the industry, and that can only be done as a real player in the industry and not from the outside analysing what’s going on.”

Adventures in sourcing

The creation of Fairphone has taken the small Amsterdam-based team around the world. The quest for conflict-free minerals, including cobalt, coltan, tin and tungsten, has taken the company to the Democratic Republic of Congo, Indonesia, Rwanda and Zambia. In some cases, Fairphone has been able to work with other initiatives already active in specific fields. For example, tin for the Fairphone has been certified by the Conflict-Free Tin Initiative, which is overseen by the Dutch government.

For assembly, Fairphone went through a tortuous process to identify the right partner. In a blog posting on its website, Fairphone details the choices that this entailed. Initially, Fairphone sought to assemble the smartphone in Europe, but found that the right type of facility simply was not available, and that many components would be manufactured in China anyway, meaning a more diffuse, less-easily monitored, supply chain.

Fairphone therefore started the search in China for a partner that was transparent, that was prepared to involve its workers and that agreed to the use of conflict-free minerals. But the partner also had to be prepared to think in terms of starting small and possibly growing big over the long term, rather than starting with a big order. “Our choice of production partner was really hard because a lot of [potential partners] don’t even consider making 20,000 phones for one party, because it’s nothing,” Van de Weerd says.

Fairphone ultimately concluded a deal with A’Hong, a Chinese manufacturer based in the cities of Chongqing and Shenzhen. A’Hong has also supported the Fairphone concept by, as the Fairphone blog notes, “making it possible for us to start the sales with only a small down payment”.

Along the way, Fairphone has realised that compromises are necessary. Establishing a manufacturing capacity outside China would have involved an unrealistically large level of complexity and investment. The decision was taken to work within the current system, and to try a different approach.

Van de Weerd says the experience has illustrated for Fairphone’s small team of 11 some of the problems that the giants such as Apple and Samsung face. For example, she says: “It’s hard to find conflict-free minerals. It’s something that is not really regular yet. Just changing countries for your sourcing isn’t the solution.” For this and other issues, she adds, “a lot of companies, electronics companies, are struggling. They want to do better, but it is so much work that they prefer to do it reactively.”

Apple, Samsung and others are enmeshed in an ethically imperfect system, and only serious competition or consumer pressure is likely to push them to make comprehensive changes, because of the difficulty of disentangling complex supply chains, Van de Weerd says. “For Samsung or Apple if they want to do this, they have to go back the whole way, and it’s so complex.”

A model for the future?

Fairphone is optimistic that the consumer pressure will build, and that its example will demonstrate that there is demand for ethical electronics. Fairphone “has proven that there are a lot of critical consumers out there, and they will become more critical – that’s what I hope,” Van de Weerd says.

Initially, Fairphone will ship only to Europe. Pre-orders have come from all European countries. Most, however, have “come from Germany, Switzerland, Austria; they are really sustainability-minded”, Van de Weerd says. “We consider a lot of different focus areas while making the phone. We cover the open source part; we cover the conflict-free minerals part; we cover made with care [and] workers’ conditions. All these different issues will speak to different people with different interests or different values.”

Fairphone expects to make a small profit, though the margin will become clearer when the smartphone cost breakdown becomes available. “We’re delivering a mid-range phone. We wanted technology that has proven its stability,” Van de Weerd says. There is no premium to pay for the Fairphone because it is ethical, and it is not easy to compare its price to similar products because “we don’t know the cost breakdown of an iPhone or a Samsung. We have no idea. We don’t know how much their profit range is.”

Profits generated by Fairphone will go to the Fairphone Foundation for further research and awareness-raising. In principle, Van de Weerd says, if the Fairphone approach is successful, something similar could be done for other products, such as computers. But Fairphone is not looking that far ahead just yet. “It is so complex. Some people ask us if we are going to make a fair tablet and a fair laptop. It’s already so much work to try and do this. For us it’s important that people become more aware of what is happening, that we get the story out there.”

Fairphone facts

  • A social business based in Amsterdam, producing a GSM/WCDMA unlocked smartphone.
  • Initiated by Bas van Abel of the Waag Society, a Dutch institute for art, science and technology. Van Abel is Fairphone’s chief executive.
  • Eleven employees; plus a wider pool of up to 150 collaborators who provide, for example, graphic design, translation and sourcing services.
  • Expecting to start fulfilling pre-orders in October 2013.
business ethics  Ethics  EthicsWatch  Fairphone  mobile phones  phones  products  Startups  Stephen Gardner 

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