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January 19, 2016updated 31 Aug 2016 9:56am

Apple and Samsung supply chains questioned again but does anyone really care?

Analysis: A report by Amnesty International reveals that cobalt used in batteries in technology devices may be produced using child labour, but do business customers care and if so what can they do about it?

By Alexander Sword

Child labour is used in the supply chain of several major device manufacturers, according to Amnesty International.

The charity claims in a report, titled "This is what we die for: Human rights abuses in the Democratic Republic of the Congo power the global trade in cobalt", that cobalt used in lithium-ion batteries comes from mines where children as young as seven work in dangerous conditions.

The cobalt is then bought by traders and sold to Congo Dongfang Mining, a subsidiary of Chinese mineral giant Huayou Cobalt. After the cobalt has been processed, it is sold to battery component manufacturers, who sell their products to battery makers which are then used in smartphones and other devices.

According to the report, these battery makers claim to supply technology and car companies, including those mentioned above.

Mark Dummett, Business & Human Rights Researcher at Amnesty International, said: "Millions of people enjoy the benefits of new technologies but rarely ask how they are made. It is high time the big brands took some responsibility for the mining of the raw materials that make their lucrative products."

For the business market which represents an increasing focus for both Apple and Samsung, whether there is any immediate impact from the pressure group highlighting the ethics of supply chain management remains to be seen.

Rob Bamforth, Principal Analyst at Quocirca, says that pressure over purchasing decisions is unlikely to come from shareholders, "unless it will improve effectiveness and competitiveness."

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However, he says that employees could have an impact on their employer’s purchasing decisions:

"If there was more pressure from employees then employers or organisations would take it more into account. But it does need that, either from external pressure on the company or from employees."

The correlation between a company’s ethics and its commercial performance in the consumer market is also somewhat unclear. A July 2014 survey by Trade Extensions found that 80 percent of UK and US consumers believe it is important for companies and brands to behave ethically. However, only 2 percent considered it the most important factor when shopping.

In the UK, 8 percent of consumers claimed that they would never buy a product from a company with a poor record on ethics or sustainability, compared to 14 percent on the US.

In the tech industry, it’s hard to find evidence that previous abuses have had a negative impact on sales or on company’s share prices when they have been reported.

This is not the first time electronics makers have faced accusations over their supply and production arrangements.

A 2009 Global Witness report also raised concerns over the mineral supply chains of Apple and Dell, amongst others.

In February 2015, the All China Federation of Trade Unions criticised Apple supplier Foxconn Technology for making staff work for more than China’s legal 40-hour limit. The Taiwanese electronics manufacturer has regularly been criticised in the media since 2010, when a spate of worker suicides increased media scrutiny of its controversial labour practices.

Where these latest allegations differ is in the lack of a direct commercial relationship between the companies and the supplier.

In this case Amnesty International is criticising the companies for failing to carry out sufficient checks on the supply chain.

Responding to the report, Apple said "Underage labour is never tolerated in our supply chain and we are proud to have led the industry in pioneering new safeguards.

"We are currently evaluating dozens of different materials, including cobalt, in order to identify labour and environmental risks as well as opportunities for Apple to bring about effective, scalable and sustainable change."

It cited regular audits of its supply chain and policies for tackling suppliers employing underage workers. According to its website, the tech giant conducted 633 audits in 2014.

"We go deep into our supply chain to enforce our social and environmental standards," reads Apple’s website. "Accountability and improvement — for our suppliers and for ourselves — are among our core objectives."

Samsung said: "If a violation of child labour is found, contracts with suppliers who use child labour will be immediately terminated."

Sony said: "We are working with the suppliers to address issues related to human rights and labour conditions at the production sites, as well as in the procurement of minerals and other raw materials."

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