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
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.)
Microsoft seeks to hold our suppliers to high standards for responsible sourcing.
All suppliers who do business with Microsoft must uphold responsible practices.
Learn about our actions to prevent modern slavery and human trafficking in our business and supply chain.
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.
Learn more about Microsoft’s raw materials sourcing strategy and programs.
At the core of Microsoft’s responsible supply chain sourcing efforts is our Social and Environmental Accountability (SEA) program.
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.
- Supplier Code of Conduct
- SEA specifications
- Third-party auditors and Microsoft SEA assessors
- EICC requirements plus Microsoft requirements
- 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.
Read about the organizations that the DSC group partnered with in the last fiscal year.
Carbon emissions reporting
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.
News and updates
Microsoft Supplier Awards recognize CSR
Microsoft’s annual supplier awards included recognition for leadership in diversity, impact sourcing, and addressing climate change.
Supplier Code of Conduct training
Read the latest requirements for code of conduct training for Microsoft suppliers.
A Cloud for Global Good
A roadmap for a trusted, responsible, and inclusive cloud.