The Global High Tech Industry and SRI What do SRI researchers need to ask? Sandy Buffett The Nautilus Institute for Security & Sustainable Development ASrIA Conference, November 2, 2001

Introduction to the California Global Corporate Accountability Project (CAP) A collaboration between the Nautilus Institute for Security and Sustainable Development, the Natural Heritage Institute and Human Rights Advocates. The CAP project seeks to identify the human rights and environmental governance dilemmas faced by US corporations in their global operations and to enhance corporate social and environmental performance. We commissioned five field studies on the global performance of California high tech firms, focusing on companies fabrication and assembly operations in Asia.

CAP High Tech Sector Reports Available in PDF format at ”Manufacturing Growth With Social Deficits: Environmental and Labor Issues in the High Tech Sector of Penang, Malaysia” “Corporate Social Responsibility at Nine Multinational Electronic Firms in Thailand” “A Study of the Environmental and Social Aspects of Taiwanese and U.S. Companies in the Hsinchu Science-based Industrial Park” “The High Tech Sector and the Environment in the New Millenium: Performance, Prescriptions, and Policy” “A Study of the Performance of the Indian IT Sector”

High Tech: Clean and Green or Toxic and Mean?? The truth lies somewhere in between

Image of High Tech Compared to “smokestack” industries, IT sector generally viewed as environmentally benign. Many firms are socially progressive at their headquarter operations. Good record of corporate philanthropy A preferred sector of SRI investors

Is high tech clean & green? Despite clean image, the industry is beset with social and environmental concerns Toxic & hazardous materials used in manufacture or “Fabrication” of semiconductors and silicon chips of particular concern Clean room “bunny suits” designed to protect the product, not necessarily the worker

4 major ethical challenges for industry worldwide Highly toxic materials used in manufacture and embodied in consumer products Inadequate standards for protection of worker health and labor rights High intensity water and energy use Poor oversight of global supply chains

Added concerns as high tech operations move to developing countries: Lack of enforcement of environmental regulation inadequate capacity for waste management lack of worker rights Lack of capacity for monitoring and verification

The main problem LACK OF CREDIBLE AND PUBLICLY DISCLOSED INFORMATION

“Fab” and assembly in Asia Taiwan-- fabrication of semiconductors; major suppliers to multinational corporations China – low-value assembly, but moving into chip fabrication Malaysia-- intermediate value assembly platforms Thailand, Philippines, Indonesia-- mostly low- value assembly

Under prevailing conditions, what should SRI investors be asking for? DISCLOSURE, DISCLOSURE, DISCLOSURE Standardized industry reporting Monitoring and verification of disclosed information

Questions that SRI researchers need to ask of the high tech industry: Procedures for safe handling of chemicals? Waste management policies? Tracking worker illnesses? Benchmarks for eco-efficiency What information mechanisms available for stakeholders? ILO core labor standards? What % of R & D committed to sustainable product design?

Copyright, no reproduction w/o permission May 2001 Sandy Buffett Senior Program Officer The Nautilus Institute for Security & Sustainable Development Berkeley, CA USA p