Letter from Chairman on recent ESG initiatives & remedies
To All Our Valuable Stakeholders,
We are aware that recent reports by well-regarded research institutions have connected Hon Hai Technology Group (Foxconn) to forced labor issues. I want to resolutely express that Foxconn is fully in compliance with our Group’s Code of Conduct. All workers at Foxconn are recruited openly and compensated fairly and in compliance with all relevant laws and regulations.
As you are aware, Foxconn’s Sustainability Committee, which is chaired by myself, integrates on a strategic level and in a coordinated manner the Group’s efforts in Environmental, Social and Governance (ESG) initiatives and remedies. Therefore, please allow me to address some of the recent developments in this important area:
- The Group has responded to such reports, such as in March 2020 related to a report by the Australian Strategic Policy Institute (ASPI), refuting alleged connection to forced labor issues. The ASPI report is a key citation in the public domain that the current report: “Passively Funding Crimes Against Humanity” bases its findings. We made clear that Foxconn categorically refutes allegations of forced labor use in our operations and issued a publicly available statement.
- The Group closely follows labor issues and policies around the world to stay updated on best practice and key concerns. This year, the Group has noted the August 2022 report by the UN OHCHR and the February 2022 report by ILO. Both gained wide attention in the global community. There is no mention of Foxconn or related partners in either reports.
- The Group continues to have direct and open conversations with different ESG agencies, including MSCI and Morningstar Sustainalytics. In most recently dialogues with MSCI, we discussed its November 4 ESG Controversies Report and we understand MSCI requires external, independent audits that are publicly available to respond to forced labor allegations. Therefore, on November 18, the Company provided the abstract of Responsible Business Alliance (“RBA”) Closure Validated Audit Report (“Audit Report”) to MSCI. The Audit Report was conducted independently by credible third parties - Elevate Limited, not RBA itself. Among the conclusions related to allegations of forced labor issues, the following were found as verbatim in the Audit Report:
- Any type of forced, involuntary or exploitative prison, indentured, bonded (including debt bondage), trafficked or slave labor is not used.
- Adequate and effective policy and procedures are established ensuring that any form of forced, bonded, involuntary or exploitative prison, trafficked or slave labor is not used.
- There are no unreasonable restrictions on the movement of workers and their access to basic liberties.
In contrast, Morningstar Sustainalytics determined Hon Hai’s rating is maintained at Low Risk 10.4 and our Labour controversial issue risk was assessed to moderate, from significant in November 2022. And Foxconn’s key customer conducts and reviews regularly any possible forced labor practices in its supply chain. In its 2022 Progress Report, the customer stated, “we found no instances where anyone was forced to work in our supply chain.” [p42]
As for the other ongoing Controversies issues raised by MSCI, including temporary and dispatch worker’s working condition and wages disputes, we have made our response to such Controversies in our 2021 ESG Insight. The remedies were made to the extent that the Hengyang site where the temporary and dispatch worker’s dispute arose from was subsequently awarded RBA – “Factory of Choice” (FOC) Program One-Star Level, which demonstrated a high-level commitment to the RBA Code of Conduct. [p12]
Foxconn welcomes stakeholders and concerned parties to discuss with us, at any time, on any important issues. We believe that direct exchanges can contribute to transparency and accuracy on issues that are critical for the global community. We hope that going forward Foxconn will be provided the opportunity to respond to critical issues ahead of a report's release to allow for fair representation in the final assessment.
My utmost thanks to you, Our Valued Stakeholders, for your continuing support of the Group.
Hon Hai Technology Group (Foxconn)