A Danwatch investigation

What are the responsibilities of the international electronics brands?

Streets of Kuala Lumpur seen from one of its tower blocks.

Nikolaj Houmann Mortensen

Journalist

Nikolaj Houmann Mortensen

Journalist

Photos: Amin Kamrani

Editor: Jesper Hyhne

28. June 2019
Malaysia is one of the world’s leading exporters of the computer chips that are found inside nearly all our electronic equipment. It is, however, not easy to trace exactly where all those Malaysian chips end up.
Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on email

Throughout the investigation on labour rights abuses in Malaysia, Danwatch detected a number of breaches of Malaysian national law. For example, the Malaysian government already passed the Passport Act in 1966, which prohibits the confiscation of passports.

But even though the working conditions are the responsibility of the Malaysian employers and covered by Malaysian law, a number of international instructions also point to the responsibility of the foreign companies that are buying products and components from the local factories.

About the investigation

Danwatch has been to Malaysia to meet some of the hundreds of thousands of migrant workers that play a vital part in the country’s electronics industry.

In Malaysia, we interviewed 12 workers from three different factories and have since conducted a number of interviews with workers via video calls.

The investigation was supported by the EU-funded project Make ICT Fair and published in collaboration with Setem.

The UN and OECD both have guidelines for companies and their obligations to assess potential human rights violations, and both state that corporations have a responsibility to counteract breaches of human rights throughout their supply chain.

The UN Guiding Principles on Business and Human Rights require companies to do so-called human rights due diligence. This in order to prevent, mitigate and account for how the company plans to address their impacts on human rights, explains Andreas Rasche, Professor in Business on Centre for Corporate Social Responsibility at Copenhagen Business School.

“When done correctly and comprehensively, the brand name company should identify relevant risks in their supply chain”, he says.

This is no matter how far-reaching the due diligence of other companies in the supply chain is.

“So, in your case with electronic brands sourcing from Malaysia, there is a responsibility as long as the work of the suppliers directly relates to products, services or operations of the brand name company”.

Neglect regulations

The OECD has a similar approach, which requires its members to build systems to assess and identify risks. They recommend that companies flag enterprises or activities that operate in high-risk regions or sectors.

The UNGP

According to the UN Guiding Principles on Business and Human Rights, the state should protect human rights while businesses should respect them – also when the state fails.

The UNGP requires corporations to take responsibility for their potential negative impacts on human rights throughout their supply chains.

More specifically, companies are expected to have:

  • A policy commitment to meet their responsibility to respect human rights
  • A human rights due diligence process to identify, prevent, mitigate and account for how they address their impacts on human rights
  • Processes to enable the remediation of any adverse human rights impacts they cause or to which they contribute.
Source: The UNGP 2019

In other words, the international brands should be extra cautious when sourcing from an industry such as the Malaysian electronics sector, where widespread labour rights abuse has been well-documented. That means the companies should be even more clear about the due diligence they have done prior to engaging in Malaysia.

But judging from the comments that Danwatch received from the international brands concerning their operations in Malaysia as well as the brands’ own websites, Andreas Rasche notes that it is unclear if they are conducting due diligence to a proper extent.

When asked about allegations of forced labour amongst the contract workers at their Malaysian subsidiary, the spokesperson from the Possehl Group solely responded to how Possehl were compensating the workers with their outstanding salaries, before adding that the Malaysian factory “is convinced that it has fully observed all regulations and legal requirements”. This is however not sufficient, according to Andreas Rasche.

“When they claim that they believe they have complied with all regulations, they neglect that international labor law also has clear regulations around forced labor”, he says.

“Their response to the wage issue is fair and right, but I also believe that we have to expect that such companies have a process in place in order to fully monitor working conditions at subsidiaries which are at risk for labor rights violations”.

Not satisfying

Andreas Rasche furthermore highlights the comments made by Toshiba and Panasonic after Danwatch asked them about labor rights abuses at a Malaysian factory, which the brands were both sourcing from. At first, the comments suggested that the brands alone trusted the statements they received from their Malaysian supplier – even though this statement contradicted Danwatch’s interviews with factory workers.

“When the companies get hints like the one from you, they need to do a somewhat deeper investigation”, Rasche says and adds that the situation should call for an independent audit, even though such audits are never any guarantee either.

“Based on their second response, Toshiba seems to be doing that now,” Rasche tells Danwatch and then points to the second response from Panasonic in which the company says it will now “consider” doing a survey that does not rely solely on the supplier’s information.

“Panasonic’s response is not satisfying”, Andreas Rasche says.

A Danwatch Investigation

The investigation divided into articles. You decide where to begin.

Do you believe this to be an important investigation?

We think it is important to investigate the influence of companies and states on human rights and the environment. And we would really like to do much more of this kind of investigative journalism.

Therefore, we hope that you would like to support our work.

If you already support Danwatch, we thank you very much.

Tip os

Har du en idé, eller har du kendskab til forhold, som du mener, vi bør undersøge – så kontakt os.

Det kan også være, at du er freelancejournalist med en god ide – skriv eller ring.

Jeg vil være anonym

Du kan bruge formularen – også anonymt – men vil du være helt sikker på, at ingen kan spore din kommunikation til os, anbefaler vi, at du installerer app’en Signal på din telefon.

I Signal kan du kontakte os på dette telefonnummer: +45 2340 6664