Putting social values first

A one-product company that hopes to redefine a whole supply chain, Fairphone makes a smartphone that the firm believes can ‘put social values first’. Fairphone audits its materials to ensure they do not contain conflict minerals and manages its supply chain to guarantee fairness at every step of the process, from labour conditions at its Chinese factory to the conduct of its German distributor.

But how do you define ‘fair’? For Bas van Abel, founder of Fairphone, the answer is pretty personal. “Fairness doesn’t have any rules. What you think is fair is not what I think is fair,” he says. 

“In Congo, where we mine our minerals, there is still child labour. There are still pretty bad working conditions.” It seems like a remarkable admission, but it also highlights the complexity of fairness. Fairphone’s mine in eastern DR Congo is free of conflict minerals, and the firm has agreed upon higher than usual labour standards with manufacturers in China. The alternative for most of those who work the mines is life in Congo’s militias, which have left five million dead over the last decade. 

Within that context, the question of fairness becomes more nuanced. But Fairphone is a remarkably open organisation and, despite the name, makes few direct claims of fairness. What it does is create something as fairly as it thinks is possible, and then gives consumers the information they need to decide for themselves.

The website contains detailed cost breakdowns of where the money goes, product designs are available to encourage people to replace broken parts themselves (so the phones last longer), and Fairphone keeps in regular digital contact with consumers.

It is also open about the mines it uses: while they are free of conflict minerals, working conditions remain poor. However, they are also audited by governments and NGOs and generate income for the local economy.  

Innovation in technology, art and culture

It all began with Waag Society, part of Amsterdam’s innovation cluster. The Waag is a beautiful, turreted 15th-century building. Part of the original city wall, it has been a weighing house, a museum and a surgical theatre where Rembrandt painted The Anatomy Lesson of Dr Nicolaes Tulp in 1632.

Today, in keeping with its history, it hosts The Waag Society, a foundation that fosters innovation in technology, art and culture. Van Abel was the society’s creative director. He headed the Open Design Lab and launched Fablab, both of which help people to better understand and create products.

It was within this innovative environment that the first seeds of Fairphone were sown. “We started looking at conflict minerals, those related to the war in Congo. We felt that if we wanted to create awareness all the way to the consumer then we have to be part of that system. So, we said, ‘Let’s make a phone,’” explains Van Abel. “We said, ‘If we sell 5,000 of these phones, we’d do it.’”

Initial funding and advice came from a number of sources, including Google, Bethnal Green Ventures, the innovation charity Nesta and Vodafone, but phone makers were less responsive. 

Crowdfunding their way to success

“The industry and marketers said there was no need or demand for ethical electronics,” says Van Abel. But with a business plan and a little money, they started their own crowdfunding and pre-sales on their website. Some 25,000 people paid for a phone that didn’t yet exist, and Fairphone had €7.5 million.

“They made the biggest impact. We could have made one phone and put it in a museum and said, ‘Look, this is possible.’ But these people showed there is an interest and that’s why the industry will take notice.” 

Handsets are now with customers, and up close the device looks similar to an iPhone and has two SIM slots. The retail price is €310 and the Fairphone website gives a detailed cost breakdown. Van Abel is particularly pleased with one function. He swoops his finger across the screen and smiles. “Swoosh! Ahh, get some peace.” The phone comes with an app that turns it off for a fixed period.

“The product itself is not the goal of the enterprise,” says Van Abel. “It could have been a watch. The beauty about a phone is that it connects to something tangible and personal. But on the other hand, it’s part of the production system: every pixel you see comes down to geology, its physical stuff – and that is the system we have become alienated from.” 

Making things better one step at a time

Van Abel describes his creation as ‘a campaigning tool that people can use’, and demand is outstripping supply. There are close to 60,000 customers on his waiting list, but Van Abel is reluctant to ramp up production too soon. The conflict-free tin mines it works with in Eastern Congo are also used by Dutch electronics giant Philips and Indian steel-maker Tata.

“They’re run by local villagers and local government,” Van Abel says. “They’re controlled by NGOs and tracking and tracing and auditing systems. Then it goes to the smelter and from the smelter it gets to the end consumer. For us it becomes solder paste, for Philips it becomes a fitting for a lamp and for Tata steel it becomes a can of cola, for example. Then we get it to our factory in China where we can stand next to the machine and say, ‘You have to use this soldering paste, not that soldering paste.’” 

Most manufacturers have left DR Congo. “As a company, you can just run away and say, ‘I’m not even going to try and mine my stuff from there because consumers will blame me,’” says Van Abel.

“But we can gradually improve the mine. First, we focussed on the conflicts, the next step is to address child labour. The miners started entrepreneurial things around the mine, people started selling things again. So, it’s a totally different way of looking at your mission. Ours is social improvement, whereas if our mission was just to sell products then we could go to Australia and get our stuff there, where we know it’s done right.”

A good base

Fairphone’s approach, mixing innovation and social conscience, seems well fitted to Amsterdam, a city regularly listed as one of the greenest in the world, and in new research, one of the ten most innovative.

Amsterdam is a good base to have an international company because it’s very easy for people to come here. If you look at the team here, there’s Nigerian, Spanish, German, Canadian, Romanian and American people, so I would say it’s not only a Dutch thing,” says Van Abel. “But I would say it is not by accident that these more pragmatic approaches to activism pop up in Holland. What is very Dutch is to combine these things with doing business.”

Read more business news from around Amsterdam.