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COMPARISON TOOL

Microsoft 61/100

(NasdaqGS:MSFT) 7 of 40 (2018)

Microsoft Corp. (Microsoft) ranks seventh out of 40 companies. It discloses considerably more information on its forced labor policies and practices than its peers on all themes except traceability and risk assessment. The company achieved the second highest score on the theme of worker voice, and the third highest score on the themes of commitment and governance, and remedy. Microsoft has improved its score by four points since 2016 by a) disclosing examples of how it engages with others on forced labor (with its peers, globally and with NGOs in the countries where its suppliers operate), b) including a provision in its code of conduct to cascade standards through supply chains, and c) providing an example of an outcome for suppliers' workers of its remedy process. Additional steps the company could take to address forced labor risks in its supply chains include strengthening its disclosure and practices on the themes of traceability and risk assessment, recruitment, and worker voice.

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61 /100

2018 Ranking: 7 of 40

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57

Microsoft was evaluated both in 2016, when it ranked fifth out of 20 companies, and in 2018, when it ranked 7th out of 40 companies. Despite a strengthened methodology which makes it harder to achieve the same score, Microsoft improved its score by four points since 2016 to 61/100. It has done this by disclosing examples of how it engages with NGOs and peers, as well as by including a provision in its code of conduct to cascade standards through supply chains, and by providing an example of how its remedy process has been used in practice.

2016 BENCHMARK

61

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.

METHODOLOGY

2016

57

Microsoft was evaluated both in 2016, when it ranked fifth out of 20 companies, and in 2018, when it ranked 7th out of 40 companies. Despite a strengthened methodology which makes it harder to achieve the same score, Microsoft improved its score by four points since 2016 to 61/100. It has done this by disclosing examples of how it engages with NGOs and peers, as well as by including a provision in its code of conduct to cascade standards through supply chains, and by providing an example of how its remedy process has been used in practice.

2016BENCHMARK

2018

61

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.

METHODOLOGY

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 23 indicators across the seven themes. For each theme, a company can score a total of 100 points.

Commitment and Governance

This theme evaluates a company's commitment to addressing forced labor, supply chain standards, management processes and board oversight, training programs, and engagement with stakeholders.

OVERALL 95
INDICATORS
Commitment
100
Supply Chain Standards
100
Management and Accountability
100
Training
75
Stakeholder Engagement
100

Traceability and Risk Assessment

This theme measures the extent to which a company demonstrates an understanding of its suppliers and their workforce by disclosing relevant information, and assesses and discloses forced labor risks across its supply chains.

OVERALL 25
Traceability
50
Risk Assessment
0

Purchasing Practices

This theme assesses to what extent a company adopts responsible purchasing practices and integrates supply chain standards into supplier selection and supplier contracts. It also assesses the degree to which a company cascades their standards down its supply chains.

OVERALL 70
Purchasing Practices
30
Supplier Selection
100
Integration into Supplier Contracts
50
Cascading Standards through the Supply Chain
100

Recruitment

This theme measures a company's approach to reducing the risk of exploitation of supply chain workers by recruitment agencies, eliminating workers' payment of fees during recruitment processes throughout its supply chains, and protecting the rights of migrant workers.

OVERALL 48
Recruitment Approach
15
Recruitment Fees
75
Monitoring and Ethical Recruitment
25
Migrant Worker Rights
75

Worker Voice

This theme measures the extent to which a company engages with workers in its supply chains, enables freedom of association, and ensures access to effective and trusted grievance mechanisms.

OVERALL 57
INDICATORS
Communication of Policies
100
Worker Voice
25
Freedom of Association
12.5
Grievance Mechanism
90

Monitoring

This theme evaluates a company's process for auditing suppliers (including whether it performs non-scheduled visits, reviews relevant documents such as wage slips or contracts, interviews workers, and audits lower-tier suppliers) and providing disclosure on the outcomes of supplier audits.

OVERALL 60
Auditing Process
80
Audit Disclosure
40

Remedy

This theme measures the extent to which a company has corrective action plan processes for non-compliant suppliers and ensures remedy is provided to workers in its supply chains who are victims of forced labor. Publicly available allegations of forced labor in a company's supply chains which occurred in the past three years, and how a company has responded to and addressed those allegations, are also assessed as part of this theme.

OVERALL 75
Corrective Action Plans
100
Remedy Programs and Response to Allegations
50

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