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Mobile Communications

The story behind the world's most ethical smartphone

Just three years ago, Fairphone wasn’t a phone company. It was just a campaign, but a lot has changed since then. To date, the Dutch social enterprise has shipped 60,000 of its original eponymous Fairphone devices, and already has pre-orders of over 7,000 for its new model.

On the face of it, that’s not a lot to write home about. 70,000 is a drop in the ocean compared to the hundreds of millions Apple, Google and Samsung move every year. Yet while Fairphone is just a small company selling an average spec Android-based smartphone on the outside, together they make a unique proposition.

The Fairphone mission

There are four conflict minerals; tin, tungsten, tantalum and gold – also known as “3TG”. All are essential to today’s electronics industry, but their raw materials are often mined from areas controlled by militias – the problem is especially acute within the Democratic Republic of Congo (DRC) – and the sale of these materials directly funds these violent groups. But because of the size and complexity of supply chains for multi-billion dollar companies such as Apple, Samsung or Google, it can be difficult for these companies to fully trace the source of all their materials.

Fairphone originally started life as a campaign to raise awareness about conflict minerals in consumer electronics. And Fairphone the phone company started in 2013, with the aim of creating a phone made from conflict-free mines and produced in factories where the workers are treated fairly – something the major phone companies have not always succeeded in. The company ran its first crowdfunding campaign to source the money needed to start production, and managed to convince 10,000 people to pay over €300 [~$300] for an ethical phone that hadn’t yet been built, by a company that had no experience of making mobile devices.

“When we started as a business in January 2013, we were a company that had never made a phone before,” says Daria Koreniushkina, the company’s Public Engagement Officer. “We didn’t really have people on board with this experience. We were actually asking ourselves: are there people who care not only about technology and design of the gadget but about where your phone comes from, who makes it, and in which conditions, what environmental impact it has?”

The original device has sold more than 60,000, with the new edition currently on pre-order. “It’s definitely been an exciting and fast paced journey. From the beginning, the main goal was to build a movement for fairer electronics.”

The world’s most ethical smartphone

The company was named Europe’s fastest growing tech startup at this year’s Next Web Conference, but despite its success, has completely retired the original Fairphone. The first edition was a licensed model – essentially a model chosen from a catalogue, while the new edition is a custom-design that mixes ethical materials and manufacturing with reparability.

Where the original model integrated conflict-free tin and tantalum, the new model wants to go further. Fairphone is aiming to add conflict-free tungsten and hopefully Fairtrade Gold to the device – something Koreniushkina says is a work in progress but close to completion. It’s also more environmentally friendly because its PCBs – supplied through Austrian firm AT&S – will contain 30% recycled copper. While the initial pre-order run is for 15,000 phones, the company is hoping to sell around 100,000 units of the new model each year. How many years that is depends on the Fairphone community.

“The average lifespan of a phone these days is two years, we would like to extend that,” Koreniushkina explains. “We want to do everything that is possible to encourage people to use their phones for a long time.”

“With Fairphone 1 we were much more limited with a license model,” says Koreniushkina. The company did offer spare parts on its site – batteries, screens, speakers and cameras, along with video tutorials, but due to the design of the phone it was difficult for anyone without hardware knowledge or the right tools to fix. The new design, however, has made reparability a much simpler affair. 

fairphone-2-dissassembled

The phone’s screen can be replaced without the need for any tools, while the other components are easily accessed and require a standard screwdriver to replace. The phone also comes with an integrated protective case to reduce fall breakage. She also adds that there is scope for extending the lifespan of the new device beyond merely fixing broken modules. “Our focus is on real reparability and building an ecosystem around that, but upgradability is something for the future.”

“If NFC technology, for example, becomes a trend and we see that most consumers need it in their phone, then we can make a case which has a NFC chip and people can put on their phone.”

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“When you design a phone from scratch of course it requires much more investment, both in terms of cash and human resources. But we saw it more as a logical next step in order to increase our influence and impact in the supply chain.”

“Owning our own design allows us to design our own supply chain,” she explains. “We were able to select suppliers ourselves aligned with our values and now we can go deeper in the supply chain and build a deeper relationship not only with our top tier manufacturers but also with second tier suppliers, those that produce key components for the phone and then go deeper and deeper step by step.”

Of the new partners for the second generation Fairphone, many of the suppliers also provide components to other major phone companies – meaning those same workers will benefit from future welfare funds, while the phones themselves may see Fairphone’s ethically-sourced materials being used in those devices.

With the original device, each phone sold contributed to Fairphone’s ethical supply chain initiative, the worker welfare fund. A new fund is planned for the new model. “We have been working very closely with our production partner in China. The welfare fund allows the workers, together with the factory management to decide on a project they want to implement for the wellbeing of the workforce and the fund means they have money to actually finance those projects.” Projects range from improving worker safety and training, to increasing wages or helping organise leisure activities. The funds currently only apply to the final factory where the phone is assembled, but the aim in the future is to create similar projects further along the supply chain.

How the company does things

It’s not just conflict-free minerals and fairer manufacturing that makes the company stick out. Fairphone embrace openness in a way few others do. As well as transparency in the supply chain, the company provided a complete breakdown of the costs associated with the original Fairphone model, listing materials, testing, the worker programs, and even being honest about how much profit the company makes on each phone: just €5 ($5.5). A similar breakdown of the new model is being finalised and is due to be released in the coming weeks [Update: now available]. “For us transparency is the way to try to run our business in all its aspects, because we believe that’s the only way.”

“By showing people how things work and what it means to make a phone, where things come from, only then can we actually educate people and create demand for more ethical products.”

Since the company works on a pre-order model – the company has no external investors and relies entirely on phones sold for income – the company does a lot of work checking demand and profiling their users. In its first year, the average Fairphone user was a German IT worker approaching his late 30s. “We don’t know the main reason for that – is it because there was more media attention in Germany or because Germans are more conscious consumers? I don’t know.” While the more updated profiles show all the different types of Fairphone supporter, almost half of the original devices went to buyers in Germany. With the new model the company are looking to expand their reach out to the rest of Europe, with a US push potentially coming next year. The biggest challenge, however, might be getting consumers to change their habits.

“In order to change behaviour, you need to educate people first.” One of the best ways to do this is to get your fans raving about how good you are. “Our strategy was to first target conscious consumers; those who are already buying Fairtrade food and are a little more conscious of the effects of consumer behaviour on the world around them.” And once those concerned consumers get their hands on a Fairphone, they can do a lot of the promotional work themselves.

“We believe that word of mouth is one of the strongest ways to spread this message, and the Fairphone is a story-telling device in itself. People ask me “what is this phone?” just out of curiosity and then instead of talking about some special technology, I can tell them about conflict minerals and spread the story and movement of fairer electronics.”

Why aren’t all phones fair?

All this does beg the question: why aren’t all phones fair and ethical? “Companies have been working on this for many years and many have done a lot already,” Koreniushkina retorts. “I think it has to do more with the complexity of the supply chain of electronic products.”

“For just one phone you need around 40 minerals that come from all over the world. Each one goes through so many steps across the globe before it becomes a component of a phone; smelting, refining and so on. In the end, just for one phone, you have a supply chain that includes hundreds and sometimes thousands of actors in it.” As well as creating the demand through the device, Fairphone is looking to lead by example and create an easily-followed standard for others to embrace. “We can do it as a small company, we have more freedom to experiment and to try out things and can speed up those processes that are already there in the industry.”

Through its actions, Fairphone hopes to show that there is demand for fairer electronics, and hopefully motivate some of their more profit-driven counterparts into taking action. “60,000 [devices] is a great feeling. It’s a great statement to the industry.” And there’s some evidence that it might be working.

“Once our fonder [Bas van Abel] was presenting at a conference and afterwards CSR manager from a big phone brand came to him, saying she was very frustrated with Fairphone. Apparently, marketing colleagues came to her and slapped the Fairphone on her table and asked ‘Why didn’t we make a Fairphone?’ despite the fact she had been pushing for something similar for years.”

“This shows there is certainly some move in the right direction.”

Although small, Fairphone is doing things on its own terms and setting the standard for what ethical electronics can look like. But of course that means it could potentially become an acquisition target for a larger phone company. Koreniushkina is coy on what would happen if someone like Google, Apple or Samsung came knocking. “We don’t have an active exit strategy. We are not looking for someone to acquire us. We also don’t exclude it, but it would have to make sense for our main purpose as a company, which is creating positive impact in the electronics supply chain.”

A European Dodd-Frank law

Passed in 2012, the conflict mineral update to the Dodd-Frank Act forced all US companies using gold, tin, tungsten and tantalum to assess whether their materials are helping fund armed groups, and then publish their findings. The act’s effectiveness has been called into question by some, but that hasn’t stopped moves to implement similar laws within the European Union. Unsurprisingly Fairphone is in favour, but with some caveats. “We fully support this effort because we believe it will increase awareness on the one hand and push for more transparent and more responsible sourcing of minerals.”

“However, one of the negative effects was that many companies started moving away from conflict mineral zones completely. So instead of sourcing certain minerals from Congo, they would go to Australia for example, and source them there so it’s conflict free.” While this ensures those businesses are technically doing the right thing, it can hurt local communities of the areas they’re no longer involved in. “This creates an even worse situation for Congo because it doesn’t support the local economy. People lose jobs and are forced to join armed groups, then it just fuels the conflict rather than solving it.”

“We are hopeful that the EU legislation will be directed towards creating more positive impact in these conflict areas by using traceability mechanisms that allow companies to source minerals conflict free but at the same time invest in those local economies and mining communities in conflict areas.”

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Dan Swinhoe

Dan is a journalist at CSO Online. Previously he was Senior Staff Writer at IDG Connect.

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