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Responsible sourcing

We strive to ensure that our suppliers uphold high standards for responsible business practices and how they treat the people who work for them.

Report last updated October 2016

Our commitment

Microsoft sets high standards for responsible business practices among our suppliers. We work hard to help our suppliers meet them.

Microsoft has relationships with thousands of suppliers around the globe, spanning both hardware suppliers that manufacture our devices and the components that go into them and indirect suppliers that provide everything from advertising services to building construction and maintenance.

Regardless of the type, we expect all suppliers who do business with Microsoft to uphold the human rights, labor, health and safety, environmental, and business ethics practices prescribed in our Supplier Code of Conduct. This code aligns with, and in certain cases exceeds, the Electronic Industry Citizenship Coalition’s (EICC’s) responsible supply chain standards. The Supplier Code of Conduct and other Social and Environmental related requirements are incorporated into our supplier contracts.

We advance our responsible sourcing commitments through:

  • Analysis of risks and opportunities
  • Assurance and accountability
  • Capacity building
  • Creating shared value

Microsoft’s Device Supply Chain group (DSC) and indirect purchasing group oversee dedicated programs to ensure that our standards are met and to build partnerships with suppliers that advance social and environmental goals. For example:

  • Since 2005, Microsoft’s Device and Supply Chain group has operated an industry-leading Social and Environmental Accountability (SEA) program to ensure that our hardware and packaging suppliers conform to our Supplier Code of Conduct and additional device-related requirements for living conditions, safe working practices, and environmental, health, and safety protection. DSC also operates the DSC Environmental Management System (EMS), a cross-company, ISO 14001 certified environmental management system that applies to all aspects of Microsoft’s hardware and packaging manufacturing supply chain, management and operations.
  • Microsoft’s Global Procurement Group created a formal responsible sourcing function in 2013 to consolidate and enhance its responsible sourcing activities with our indirect suppliers (our suppliers outside those that make our hardware devices and the components and raw materials that go into them.)

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Microsoft seeks to hold our suppliers to high standards for responsible sourcing.

All suppliers who do business with Microsoft must uphold responsible practices.

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Learn about our actions to prevent modern slavery and human trafficking in our business and supply chain.

Microsoft also recognizes the role we play to enable and empower people to achieve the UN Sustainable Development Goals. In the Microsoft Device Supply Chain group, we outline the contributions we have made in the last year towards meeting the Sustainable Development Goals set by the UN to improve people’s quality of life, protect the environment, and foster equitable growth.

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Learn how Microsoft is working to help realize important goals set forth by the UN.

Risk Assessment

We approach our efforts around responsible sourcing based on the social and environmental opportunity and risk in our supply chain.

We apply a risk-based approach to focus our efforts across our global base of suppliers, considering but not limited to the following:

  • Their social and environmental risks
  • Our spend and influence with them
  • Their connection to our products and services

We also ask our suppliers to disclose the material composition for 100 percent of each device and packaging component they provide us. Today more than 100,000 device and packaging components have been evaluated for compliance. In addition, our Microsoft’s Device Supply Chain group suppliers are required to provide validation test results showing compliance with all global substance restrictions per our specifications. This digital data set is accessed by software that provides product-specific analyses of key metrics. This smart database allows us to use environmental engineering time efficiently to track and eliminate substances according to global regulations, market requirements, and our voluntary efforts. This process is a gating item in all new product development.

To monitor and evaluate the Microsoft Device Supply Chain group’s social and environmental performance of our suppliers we use an Audit Management System (AMS) built using Microsoft technologies/tools: Visual Studio, Visual Studio Team Services, Microsoft.NET, Azure SQL, and Azure blob storage. The tool is hosted on Microsoft Azure. Using Microsoft Power BI with AMS provides the ability to build greater visual insight into the data. The AMS allows us to have “one source of truth” and, with the use of workflows, has enhanced our audit database of supplier sustainability assessments to allow for better analysis of corrective actions and individual and cumulative results.

Recognizing the vast number of raw materials and the complexity of our supply chain, Microsoft uses a risk-based approach to assess our raw material sourcing. This considers the following dimensions: risk to Microsoft’s supply chain, material-specific social and environmental risks and Microsoft’s ability to influence and impact production of those materials to assess and prioritize addressing the social and environmental risks associated with raw materials.

Microsoft production supplier locations

World map with pinpoints showing Microsoft production supplier locations
United States
United Kingdom
Czech Republic
South Korea

Over the past several years, we also enhanced how we assess and manage social and environmental risks across the full range of our indirect suppliers. Microsoft screens our non-hardware suppliers against 23 different ethical, social, and environmental risks by country and by commodity category. We apply assurance requirements for suppliers found to pose the highest risks. Among these, we have dedicated supplier training and assurance programs related to anti-corruption, privacy, and security.

Microsoft sparked the creation of the Committee on Supplier Ratings, a new collaborative effort designed to help purchasers engage indirect suppliers on sustainability issues by leveraging a range of respected company rating systems.

Read this article in Forbes magazine: Microsoft's Committee on Supplier Ratings Takes Sustainability to the Supply Chain


The number of different ethical, social, and environmental risks Microsoft uses to screen our non-hardware suppliers.


We engage our directly-contracted hardware packaging suppliers, and our indirect suppliers, in our accountability process.

We systematically engage all of our contracted hardware and packaging suppliers with the goal to move them from compliance, to self-management, to an embrace of a culture that fosters social and environmental accountability.

Each of our suppliers is expected to demonstrate compliance with all applicable laws, regulations, and our specifications. To ensure continuous performance, suppliers must evolve their focus from reactive risk management to the development of strong management systems, and progression to a preventive mindset. This transformation allows them to proactively mitigate risks, monitor performance, and continuously improve.

Ultimately, we want our suppliers to institute a Social and Environmental Accountability (SEA) culture by integrating SEA into their overall business management. This involves engagement at all levels of the supplier organization and making SEA part of their company DNA.

Supplier SEA Engagement Approach

We systematically and proactively engage with our hardware and packaging suppliers to communicate our requirements and expectations. Our four-step Social and Environmental Accountability engagement approach includes an initial assessment and audit as part of our onboarding process, as well as ongoing engagement and monitoring.

  • Contracts
  • Supplier Code of Conduct
  • SEA specifications
  • Third-party auditors and Microsoft SEA assessors
  • EICC requirements plus Microsoft requirements
  • Scorecards
  • Root cause identification
  • Corrective and preventive action
  • Safety and high risk management guidance
  • Enhanced living conditions checklist
  • Grievance hotline
  • Training, coaching, and best practice sharing

This approach spans multiple tiers of our directly contracted suppliers:

  • Tier 1 suppliers: Manufacturing partners with whom Microsoft has a direct contractual relationship. They manufacture Microsoft hardware components and products.
  • Contracted Tier 2 suppliers: Suppliers with whom Microsoft has a direct contractual relationship to provide components or materials to our Tier 1 suppliers.
  • We also require contracted suppliers to ensure that their direct suppliers conform to our specifications, which allows Microsoft to indirectly push its principles further upstream to sub-tier suppliers with whom we do not have contractual relationships.

DSC Manufacturing, Strategic Sourcing, and SEA teams work with our suppliers to ensure that the corrective action plans to remedy audit and assessment findings address the identified risks and root causes and are implemented in a timely manner. Follow-up audits are conducted to ensure that corrective actions are implemented and closed.

Where needed, we also provide suppliers with best practices to help them build necessary capabilities and apply sustainable solutions to identified issues. Our primary motivation is to push for continuous improvement of the SEA program and supplier performance. Where improvement is not possible, we may restrict further business to the factory and phase out the factory from our active supplier list.

Microsoft is dedicated to achieving extended, responsible sourcing strategies by building capabilities in and partnering with NGOs, the electronics industry sector, and other industry sectors. We believe collaboration is the best avenue to establish global, and industry-wide, sustainable design and responsible sourcing practices. In addition, these groups offer us the diverse points of view that test and up-level our thinking.

Responsible sourcing is an important focus within our indirect supplier program.

Among our indirect suppliers, our Responsible Sourcing program monitors our designated top strategic suppliers through quarterly scorecards that are integrated into their business dashboards, and through regular review with Microsoft category sourcing managers. The Responsible Sourcing program also includes onsite compliance assessments of outsourced customer service and support call centers. In FY16, we completed 65 such onsite assessments.

To advance transparency, we also require our Tier 1 contract hardware manufacturers and operators of customer service and support call centers to issue their own public corporate social responsibility reports based on the requirements in the Global Reporting Initiative.

We’ve pioneered a new approach in the U.S. to set standards for suppliers to provide employees with paid time off.

As a special initiative, in FY16 we began integrating our new procurement standards into the contract renewal process to ensure that our suppliers in the U.S. provide their employees who handle our work with at least 15 days of paid leave each year. We believe we were the first large company to take this approach, and we gained significant attention for the move from the media, policymakers, and other companies. We are working to be thoughtful to ensure that these changes don’t undermine the breadth and diversity of our suppliers.

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Read about the organizations that the DSC group partnered with in the last fiscal year.

Capacity building

While our auditing and assessment efforts provide insight to risks and act as assurance mechanisms, they are only effective for a point in time unless we are able to build long-term expertise and systems. This long-term view toward factory sustainability is exemplified through model factories and other purpose-driven programs.

We focus on building supplier capabilities through training and sharing experiences and best practices. Explore examples in the sections below.

Factory worker health and safety is a top priority for Microsoft. Over the past four years, we have significantly expanded our engagements to help directly contracted hardware suppliers create and maintain safe working environments:

  • Microsoft’s SEA team has designed 42 EHS training courses and provided onsite consultation to help build suppliers’ capabilities.
  • In FY16, 330 EHS professionals from Microsoft suppliers attended our SEA in-house training, representing factories with more than 30,000 workers.
  • We also continued to emphasize the need for competent and experienced EHS professionals in the factory to define and implement the programs necessary to build a culture of health and safety. To date, we have worked with 37 suppliers on gaining certification of safety culture programs.

The Safety Culture project requires suppliers to conduct a self-assessment of eight key areas of the safety commitment, including risk control and accident prevention, worker participation, and training. Directly contracted hardware suppliers are given two quarters to work on the areas they have identified, and then a formal assessment is conducted by the SEA program manager at the supplier site. Since the pilot program in FY14, we continued to implement this program with 37 suppliers.

The Process Chemical Management Program restricts and drives the phase-out of certain chemicals from the manufacturing processes of our directly contracted hardware suppliers. In FY16, we worked to further evaluate potential impacts to the workers and environment by chemicals and substances used in manufacturing and disposal, and then expanded our list of banned chemicals. We also worked closely with suppliers on systems and approaches that will enable more effective management and evaluation of chemical usage.

We will continue to proactively restrict identified and evaluated harmful process chemicals, as well as actively support our suppliers in their phase-out process. In FY16, we continued to evaluate potential impacts to the workers and environment by chemicals and substances used in manufacturing and disposal, and then expanded the list of banned chemicals. In the meantime, we worked closely with suppliers on systems and approaches that will enable more effective management and evaluation of chemical usage.

For the past three years, we worked closely with all Tier 1 hardware suppliers to meet requirements of our Model Factory program. Through the Model Factory scorecard, we have seen significant improvements in the suppliers’ performance in the critical areas of their sustainability programs. The objective of this scorecard is to achieve a higher standard in compliance, living conditions, worker training and development, Environment, Health and Safety management, communication, and transparency.

Microsoft’s Carbon Disclosure Project (CDP) report includes emissions associated with our direct manufacturing and, at a minimum, 80% of our suppliers by spend. For indirect suppliers, we engage the CDP Supply Chain Program to provide our suppliers a standardized platform to understand the risks and opportunities that climate change presents to them.

Over the last two years, Microsoft has increased its indirect supplier response to the CDP Supplier questionnaire nine-fold, from 17 to 153 respondents (Figure A). The 153 suppliers that disclosed in 2015 reported $4 billion invested in emissions reduction activities, reducing their collective footprint by 5.6 million metric tons of carbon dioxide equivalents (CO2e) and saving them $865 million.

We provide supplier development and training resources including our Supplier Code of Conduct Training Program across our broad base of indirect suppliers. This online training is mandatory for external staff to ensure that they understand and follow ethical business practices in accordance with our Supplier Code of Conduct. In FY16, 49,997 employees at 10,817 suppliers completed this training.


Carbon emissions reporting

  • 17
  • 52
  • 153
  • CDP 2013
  • CDP 2014
  • CDP 2015

9x increase in indirect suppliers disclosing climate change impact

The carbon reduction made by our indirect suppliers is equivalent to the annual emissions of 750,670 American households.

Microsoft hardware and devices, including an Xbox and Surface

Sourcing of raw materials

Microsoft’s Responsible Sourcing of Raw Materials policy extends our Supplier Code of Conduct to the furthest reaches of our upstream supply chain in support of human rights, labor, health and safety, environmental protection, and business ethics. This commitment is global in scope and applies to all substances used in our devices and packaging, unbounded by materials or geographic origin.

Raw material supply chains are complex due to the multiple levels of processing and the diverse usages across different industries. Given this complexity, we are focusing our efforts to influence social and environmental improvements in the extractive industries through strategic collaborations that achieve our goal at scale. Microsoft actively works with other companies, global and local non-governmental organizations, and industrial associations to support standards-setting, align industry-wide and cross-industry efforts, and exchange best practices.

Examples of our collaboration and capability building efforts include Microsoft’s support and participation in the work of several industry and NGO organizations directly related to our upstream supply chain, such as Pact and the Initiative for Responsible Mining and Alliance for Responsible Mining, which are listed among the groups we collaborated with in FY16 in our document listing partnerships with NGOs and industry groups.

Conflict minerals

We have collaborated with our suppliers and other hardware companies since 2007 to address conflict minerals.

As directed by the Dodd-Frank Act, the Securities and Exchange Commission (SEC) requires registrants whose products contain certain “conflict minerals” (tungsten, tin, tantalum, or gold, referred to as “3TG”) to report annually whether those minerals originate from the Democratic Republic of the Congo (DRC) or an adjoining country. The act seeks to remove one of the main motives for armed conflict in this region—control of lucrative mines.

Microsoft has published a Conflict Minerals Report annually since 2014. Our latest Conflict Minerals Report, published in May 2016, demonstrates meaningful efforts and progress toward establishing a “conflict-free” supply chain. The number of certified conflict-free smelters in our supply chain increased from 148 to 213, due to enhanced supplier outreach and the maturation of the Conflict Free Smelter Program (CFSP), of which we were an original participant and remain a strong supporter.

Our conflict minerals tracking efforts are aligned to the Organization for Economic Cooperation and Development (OECD) Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Microsoft’s full material declarations database for our hardware products enables us to identify every component in our current device portfolio containing tin, gold, tantalum, or tungsten. We then identify the suppliers of these components with the assistance of Sourcing and Manufacturing and educate the suppliers regarding the conflict-minerals issue.

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Find more detailed results of our conflict minerals due diligence process and findings.

Creating shared value

We seek to collaborate with our supply chain on partnerships that benefit Microsoft, our suppliers, and those who work for them. We also actively seek ways to improve the lives of the people and communities who help to further our work.

Microsoft has a long-standing and strong commitment to source from historically disadvantaged groups.

Our Procurement team is committed to increasing our spending with diverse suppliers as part of our Supplier Diversity Program. We also have focused programs in place to encourage diversity among the law firms we do business with and to increase the diversity of banks and financial institutions we use.

Microsoft spending with businesses owned by minorities, veterans, and women

  • $1.9B
  • $2B
  • $2.3B
  • $2.5B
  • FY13
  • FY14
  • FY15
  • FY16

Top 20 in the world

Microsoft’s place in terms of global spending with businesses led by historically disadvantaged groups.

We invest in worker and community learning opportunities to improve the lives of people in our supply chain.

Among the ways we are helping to advance the UN Sustainable Development Goals is leveraging our supplier relationships to promote greater access to education and technology skills.

Through the Microsoft YouthSpark Supplier Community Technology Center (CTC) program, we collaborate with suppliers to further extend the reach of Microsoft’s YouthSpark initiative. We provide curriculum and support to help our suppliers use their facilities to host technology skills trainings for their employees and to local community members. These trainings provide participants an opportunity to receive a no-cost Microsoft Digital Literacy certificate, a key qualification for many technology jobs. To date, 16 suppliers have launched centers at 26 locations in 14 countries and trained 60,000 participants to achieve a Microsoft Digital Literacy Certificate.

We have also worked closely with our Tier 1 hardware factories to ensure workers have access to a broad range of onsite and online career development and life skills classes. Over the past two years, 214,574 workers had participated in these training programs. These include the HER Women Health project, Migrant Parenting training, and YouthSpark computer training.

We are committed to helping suppliers hire and train disadvantaged workers.

This practice is called impact sourcing. In FY16 we continued our collaboration with the Rockefeller Foundation to research and promote best practices in impact sourcing” with suppliers who proactively seek to provide work and training opportunities to high-potential but disadvantaged individuals.

Here are some examples of how we’re addressing this challenge:

  • The corporate Customer Service and Support group is integrating impact sourcing with their strategic, multinational contact center suppliers, which is impacting thousands of disadvantaged workers.
  • Our Real Estate and Facility organization works with neurologically and physically disadvantaged workers in their supported employability program.
  • Some of our software groups are engaging neurologically and physically disadvantaged workers to perform application testing services.
  • Finally, we continue to build more inclusive and productive supply chains beyond Microsoft by participating in over 20 Rockefeller sponsored business cases, publications, and conferences. This includes participating in the founding of the Global Impact Sourcing Coalition (GISC) to promote best practices in impact sourcing.

We encourage and recognize suppliers who have made exceptional impact in social and environmental areas.

One way we do this is through our supplier awards program for indirect suppliers. These are highlighted as examples to attendees of our annual supplier summit. In 2016, these included a Supplier Diversity Award, Impact Sourcing Leadership Award, and Climate Performance Leadership Award.

In FY16, Microsoft supported impact sourcing projects in 11 countries including the United States, Kenya, Uganda, and India for services such as back-office work and facilities management.

Modes of transportation used to transport materials
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