Case studies

Responding to worker grievance

In fiscal 2022, the Supply Chain Sustainability team at Cisco received a complaint through Cisco's grievance mechanism, EthicsLine. A supply chain worker alleged that their employer was a supplier to Cisco and that they were subjected to a variety of forced labor issues, including passport withholding, recruitment fees, and penalties for resigning.

Cisco reviewed the worker's allegations and opened a formal channel to directly communicate with the worker to gather more information and receive periodic updates. In conjunction with this conversation, Cisco reviewed our business relationships with the supplier and identified it as a "low-spend" components supplier—a supplier that provided parts to Cisco's manufacturing partners. Due to low spend and lack of visibility into sub-tier relationships and data on worker characteristics, Cisco had not included the supplier in our vulnerable worker risk assessment as part of our usual course risk-based process. However, in light of the worker complaint, Cisco engaged with the supplier and confirmed multiple elements of the allegation.

Cisco took immediate action to address the allegations, including putting the supplier on a Supplier Improvement Plan, an internal Cisco process aimed at improving supplier performance to comply with our standards and policies. To ensure a comprehensive investigation and thorough mitigation plan, Cisco alerted and engaged the RBA, which conducted a Specialty Validated Assessment Program (SVAP) on forced labor. The RBA garnered industry support and used collective leverage to show the supplier that they would have to conform to a consistent set of conditions and industry standards. The industry approach minimized confusion for the supplier and meant a single entity would drive the fulfilment of the Corrective Action Plan.

The plan mandated the following changes:

• A timeline to reimburse employees
• Updates to policies to prohibit fees paid by workers
• Revised worker contracts to remove a requirement that workers pay fees
• Revised labor agent contracts to prevent fees from being passed onto workers and removed other restrictions agents put on workers

Cisco is continuing to work with the RBA to monitor the supplier site's progress toward remediating the affected workers and to validate that the corrective and preventive actions were implemented effectively.

This case brought forward a host of lessons learned. We continue to find power in collective action, especially when it comes to driving change with suppliers with which we have low leverage. We also continue to explore how broader education of suppliers and direct engagement with labor brokers and affected workers can drive elimination of forced labor within the supply chain, especially where local law on issues such as charging recruitment fees conflicts with international standards and best practices.

Helping supply chain workers find their voice

Engaging supply chain workers is crucial but not always easy. To help facilitate dialogues with supply chain workers, Cisco in fiscal 2022 partnered with the nonprofit Social Accountability International (SAI) to implement its TenSquared program—a 100-working-day engagement effort that brings together supply chain workers and managers to collaboratively identify and address challenges on occupational health and safety.

As part of our emphasis on industry collaboration, Cisco and another industry peer jointly deployed the TenSquared program at four supplier sites in fiscal 2022. There were ten participants at each site—five managers and five front-line workers—who worked together over the 100 working days to jointly identify an issue and achieve a goal focused on occupational health and safety. Workers and managers were tasked with creating systemic solutions that would last beyond the duration of the TenSquared program.

Ahead of the program's launch, the ten members at each site held pre-project meetings to finalize and introduce team members. Subsequent two-day launch workshops were held, where the teams raised issues of concern, such as operational safety rates, noise levels, and chemical and hazardous chemical risk exposure rates, and started brainstorming ways to tackle them. During the next several weeks, teams came up with ideas to tackle their chosen problems, review the challenges, and adjust the plan during a midpoint review workshop. The program ended with a sustainability review workshop to ensure the supplier sites could embed key TenSquared themes and implement its methodology, either through additional workshops or other occupational health safety mechanisms.

Overall, Cisco was proud of the breadth and depth of solutions that the program sparked:

• One of the suppliers focused on increasing workers' occupational health and safety behavior rate from about 80 percent to about 95 percent in a pressing production workshop. The supplier site has maintained that improved rate into fiscal 2023. A key innovation the workers requested was to designate personal safety observers who wore blue vests could support workers in maintaining proper health and safety behaviors during every shift, day or night. This uniform became a visual reminder for workers, especially those new to the factory floor, to follow steps to safeguard their health and safety. This simple action has encouraged both managers and workers to continue to work together to ensure that safety is a priority.
• In addition, they trained workers to take more responsibility around health and safety by helping determine if their workplace was safe or not. Managers invited workers to help brainstorm and devise workplace safety solutions, including having workers observe and flag safety precautions. Workers agreed to rotate this observer role so that each worker could have the opportunity to perform and watch the implementation of safe behaviors. By engaging more workers in a practical way, the supplier found that workers prioritized safe behaviors and even reminded colleagues to do the same. In essence, the training created a culture of safety rooted in worker inclusion and buy-in that has been sustained with new hires who joined during and after the TenSquared workshop.

The program team from the four suppliers provided positive feedback from the workers and managers, which convinced Cisco to continue this program in fiscal 2023. Feedback we received included:

• "The methodology has improved the factories' original management weaknesses."
• "This program is more useful than internal OHS training and is very interesting."
• "100 days is too short; we wish we could have more opportunities to exchange ideas."
• "Nice to hear from workers that they need more training and info on hazardous materials."

Using TenSquared revealed that greater worker engagement yields sustainable solutions to tough workplace issues. In addition, bringing together workers and managers improved overall communication, with management becoming more aware of workers' ability to contribute solutions to many onsite issues. The collaborative framework of TenSquared created a mechanism whereby workers feel more comfortable sharing their ideas, and where workers can get recognized for innovation. Workers also feel more empowered since they have a better understanding of the purpose of health and safety policies and procedures. The workers thus see how their adherence to and participation in workplace safety results in an overall safer environment. Cisco will continue TenSquared in fiscal 2023 to help these four suppliers sustain this program methodology and will partner with additional suppliers to expand the program's benefits.

Protecting young workers

Cisco aims to improve working conditions in our supply chain, including identifying and auditing "high risk" suppliers to ensure they comply with the company's Supplier Code of Conduct. This includes protecting workers between the ages of 16 and 18 who are legally permitted to work in the relevant jurisdiction, specifically against the types of work that could negatively impact their health, such as overtime and night shifts.

Cisco considers young workers a vulnerable group alongside others such as migrant workers and marginalized peoples. We make extra efforts to identify and mitigate risks at the manufacturing and components suppliers who employ them. Our Juvenile Labor Policy and Expectations outlines how we protect workers between the ages of 16 and 18.

In April 2021, Cisco conducted an RBA audit of a component supplier site that was identified as high-risk in our annual assessment and with whom we had low spend and low leverage. This audit uncovered that managers were having their young workers work overtime and night shifts, which is not allowed under Cisco's Supplier Code of Conduct. In addition, the site did not register all juvenile employees at the local labor administrative department, which is a violation of local legal requirements. There were also other labor and health and safety issues at the component supplier site.

As part of the Correct Action Plan, the site registered all the young workers with the local administrative authorities, but refused to immediately resolve the overtime and night shift for these workers, citing regional labor shortages. To address Cisco's expectations, the site chose to reassign workers from Cisco designated production lines to another part of the factory rather than stop them from working overtime and night shifts, raising a red flag for Cisco. Cisco persisted in asking for the cessation of all overtime and night shifts for the young workers, not just shifting workers so that they were not linked to building Cisco products. In subsequent discussions, the supplier proposed a mitigation timeline of several years to replace the younger workers with age-appropriate workers. This solution again did not satisfy Cisco's requirement for an immediate resolution. Cisco persisted and in December 2021, Gordon Buckle and his team from Global Supplier Management held steadfast to Cisco's expectations and Cisco and the supplier were able to foster a path forward.

Cisco's persistence successfully led the supplier to resolve the issue—continuous escalation through supply chain management and continued focus on full conformance to our standards is what finally drove the supplier to fix their nonconformance. A final review by Cisco's supply chain sustainability team validated that all overtime and night shifts for young workers were stopped in June 2022—with the supplier providing sufficient evidence to prove that the issue had been resolved.

"Cisco has a purpose to Power an Inclusive Future for All. We believe in a world with equal access to opportunity, a world in which businesses operate with all aspects of society in mind," said Buckle, Head of Specialty Technologies, Global Supplier Management. "Cisco prides itself on using its supply chain to catalyze positive impacts for people and communities, and this situation showed that Cisco's persistence could create better outcomes," he said.

Cisco continues to ensure that vulnerable workers, such as young workers, while not a large portion of the overall worker population, are protected and not mistreated.

Helping contract manufacturers avoid excessive working hours

During fiscal 2022, Cisco discovered that one of our third-party contract manufacturers' locations was experiencing persistent working hours nonconformances for several quarters in a row. As part of our due diligence, we worked to understand why. During the discovery process, Cisco brought together stakeholders from the contract manufacturer and Cisco's internal operations and production planning departments to identify the root causes. It was revealed that multiple factors were at play: late shipment arrivals were prompting overtime work on weekends, lengthening consecutive working days; order backlogs created pressure to manufacture products outside of planned production schedules to meet customer expectations; and labor shortages exacerbated the situation. In addition, there were plant-wide shared staff—emergency personnel—whose total number of hours were not being accounted for.

As a result, both Cisco and the manufacturer collaborated to implement short-term solutions to reduce working hours and eventually prevent excessive working hours over the longer term. While there were robust communication channels to address production needs, there were less robust channels open around the impacts of variable working days, such as holidays, and their impact on working hours and consecutive working days. As a near-term solution, production schedulers were empowered to factor in the variety of observed holidays to create an overall working schedule that better supported working hours and days-off goals. Over the long term, Cisco and the manufacturer intend to work with supply planning to better communicate the timing of supply shipments and adjust deliveries in a manner designed to support workforce planning.

The discovery process yielded lessons that Cisco is working to operationalize so that we can better support our contract manufacturers to avoid excessive working hours. Cisco is better able to understand how supply chain constraints are demanding more dynamism from plant managers and how these variables impact workers' schedules. We are continuing to work to give plant managers the tools to better forecast how ebbs and flows in component parts could affect the volume of product produced, and thus the number of workers needed to realize such orders.

Reducing GHG emissions through test optimization

As part of our manufacturing process, every product Cisco makes is thoroughly tested for quality assurance. One method is a stress test commonly known as two- or four-corner testing, where products are tested at specific sets of temperature and voltage levels. This kind of stress testing is particularly carbon-intensive due to the electricity and refrigerants used to reach and maintain the required temperature levels.

In collaboration with our manufacturing partners, Cisco engineers are leveraging data insights to optimize the manufacturing testing process to increase efficiency and minimize carbon emissions. After starting with one pilot project supporting one business unit, test optimization has expanded to include additional business units, resulting in 13,642 metric tonne of avoided carbon emissions in fiscal 2022—the equivalent of 2939 cars taken off the road for one year. We are continuing to expand this pilot to more supplier sites and Cisco business units, with the goal of scaling across Cisco's entire product portfolio.