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ASML Holding 26/100

(NASDAQ:ASML) 15 of 20 (2016)

ASML Holding (ASML) ranks fifteenth on the ICT benchmark overall, demonstrating below average disclosure of its approach to managing forced labor risks in its supply chain. ASML demonstrates an awareness of the risks of forced labor across the themes investigated; however, the company performs below the benchmark average across all themes. ASML has a number of opportunities to improve its performance particularly in the themes traceability and risk assessment, worker voice, and recruitment. The largest opportunities for improvement is in its approach to addressing recruitment practices in its supply chain, where the company may consider adopting a supplier requirement that no fees be charged during any recruitment process and that fees are repaid to workers in the event that such fees are discovered to have been paid.

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26 /100

2016 Ranking: 15 of 20

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26

ASML was evalauted in both 2016, when it ranked 15th out of 20 companies, and in 2018, when it moved to the top half of the benchmark, now ranking 16th out of 40 companies. Despite a strengthened methodology which makes it harder to achieve the same score, it improved its score by ten points since 2016 (26/100 to36/100). It has done this by disclosing a supplier code of conduct on its website; using the code of the Responsible Business Alliance (RBA) which includes provisions on recruitment fees and migrant workers and is available in several languages; and disclosing details on how it engages with the RBA as well as a process to assess forced labor risks at potential suppliers prior to entering into contracts.

METHODOLOGY

36

The average score for the sector was 32/100, compared to 39/100 in 2016. The drop in score is due in part to the increase in number of small and mid cap companies from 20 to 40, as well as the changes made to the methodology that strengthened it. The 20 companies benchmarked in both 2016 and 2018 saw their average score improve from 39/100 to 40/100, which is notable given the changes to the methodology.

2018 BENCHMARK

2016

26

ASML was evalauted in both 2016, when it ranked 15th out of 20 companies, and in 2018, when it moved to the top half of the benchmark, now ranking 16th out of 40 companies. Despite a strengthened methodology which makes it harder to achieve the same score, it improved its score by ten points since 2016 (26/100 to36/100). It has done this by disclosing a supplier code of conduct on its website; using the code of the Responsible Business Alliance (RBA) which includes provisions on recruitment fees and migrant workers and is available in several languages; and disclosing details on how it engages with the RBA as well as a process to assess forced labor risks at potential suppliers prior to entering into contracts.

METHODOLOGY

2018

36

The average score for the sector was 32/100, compared to 39/100 in 2016. The drop in score is due in part to the increase in number of small and mid cap companies from 20 to 40, as well as the changes made to the methodology that strengthened it. The 20 companies benchmarked in both 2016 and 2018 saw their average score improve from 39/100 to 40/100, which is notable given the changes to the methodology.

2018BENCHMARK

THEME AND INDICATOR SCORE

The benchmark methodology has seven themes, selected to capture the key areas where companies need to take action to eradicate forced labor from their supply chains. There are a total of 22 indicators across the seven themes. For each theme, a company can score a total of 100 points.

Commitment and Governance

The company's top-level commitments on forced labor, supply chain standards, management processes, training programs and stakeholder engagement

OVERALL 44
INDICATORS
Awareness and Commitment
50
Supply Chain Standards
20
Management and Accountability
50
Training
50
Stakeholder Engagement
50

Traceability and Risk Assessment

The extent to which the company traces its supply chain and conducts forced labor risk assessments, and discloses information about these processes.

OVERALL 25
Traceability and Risk Assessment
50
Transparency
0

Purchasing Practices

The company's awareness and action on purchasing practices that can exacerbate forced labor risks, and its process for selecting suppliers, integrating standards into contracts and cascading them down the supply chain.

OVERALL 38
Purchasing Practices
0
Supplier Selection
0
Integration into Supplier Contracts
100
Cascading Standards through the Supply Chain
50

Recruitment

The company's approach to reducing exploitation by recruitment agencies and eliminating workers' payment of fees for their jobs.

OVERALL 0
Recruitment Approach
0
Recruitment Fees
0
Recruitment Audits
0

Worker Voice

The extent to which the company proactively communicates with workers through the supply chain, enables freedom of association and ensures access to effective and trusted grievance mechanisms.

OVERALL 5
INDICATORS
Communication of Policies
0
Worker Voice
0
Worker Empowerment
0
Grievance Mechanism
20

Monitoring

The company's process for auditing (including whether it includes non-scheduled visits, document review, worker interviews) and disclosure about the audit process and findings.

OVERALL 33
Auditing Process
25
Audit Disclosure
40

Remedy

The extent to which the company has corrective action plans for non-compliant factories, as well as processes for remedying workers who are victims of forced labor, and reports on remedies provided.

OVERALL 38
Corrective Action Plans
75
Remedy Programs
0

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