Our dedicated organizational unit consisting of RBA-certified auditors1) conducts on-site audits of our suppliers. We review their documents thoroughly, including wage information, contracts, and policies, and perform interviews of their employees (a minimum of square root of the total number of employees) engaging with both working level staff and managers during the audits. We manage all identified improvement points through the Purchasing System. We register risk grades and detailed audit findings on Purchasing System once the participating employees of the respective supplier confirm the results. We require each supplier to submit its improvement plan and results, and our country/region-specific staff in charge reviews them along with the supplier’s employees or representatives.
We guide suppliers to take immediate remedial actions on site if possible and normally monitor whether they have taken remedial actions within three months from the registration of the improvement points. We monitor facility installation, certification, and other matters that require extended time and significant expenses over a longer term based on the respective supplier’s improvement plan. We demand suppliers found to have committed audit findings in our priority areas, including prohibition of child labor and forced labor, to take immediate remedial actions and impose penalties in the comprehensive evaluations.
We also operate a working-hours monitoring system to ensure that our suppliers comply with our work-hours requirements. Through this system, we review the average working hours and maximum working hours of our suppliers’ employees at different business sites on a monthly basis and rate them in accordance with the seriousness of non-compliance. In 2024, DX Division conducted on-site audits of all 368 high-risk suppliers2) using the RBA assessment criteria and implemented corrective actions where necessary, resulting in a final compliance rate of 95.5%. Meanwhile, DS Division audited nine key suppliers of Samsung China Semiconductor (SCS) Corporation, carrying out corrective measures and achieving a final compliance rate of 89.9%.
Starting in 2024, Samsung Electronics introduced on-site audits of second-tier suppliers, carried out by high-risk first-tier suppliers. To support this program, we developed and distributed a specialized audit toolkit aligned with Samsung Electronics’ standards and provided training for first-tier suppliers. Using these criteria, first-tier suppliers identified key high-risk second-tier suppliers and conducted on-site audits of more than 300 companies. We remain committed to working alongside first-tier suppliers to further enhance our supplier oversight and expand the reach of our audits.
Samsung Electronics has a zero-tolerance policy towards child labor. To prevent suppliers from employing child labor, we have conducted special audits at recruitment sites annually since 2015, especially during middle school and high school vacations, when child labor recruitment is likely to occur. Since 2018, we expanded these audits to second-tier suppliers. We assess actual and potential risks by reviewing recruitment postings and policies, verifying identities, and conducting employee interviews.
Samsung Electronics audited 133 first-tier suppliers, 67 in DX Division and 66 in DS Division, and 32 second-tier suppliers in East Asia. None of these suppliers employed child labor. However, six suppliers had deficiencies in their recruitment processes, including a lack of facial recognition protocols for identification and insufficient student worker protection policies in contracts. These suppliers have since taken measures to improve upon these deficiencies.
Samsung Electronics audited 112 first-tier suppliers, 50 in DX Division and 62 in DS Division, and 32 second-tier suppliers in East Asia. None of these suppliers employed child. However, three suppliers had deficiencies in their recruitment processes, including a lack of facial recognition protocols for identification. These suppliers have since taken measures to improve upon these deficiencies.
At Samsung Electronics, we have audited 119 first-tier suppliers and 31 second-tier suppliers in East Asia. We strategically timed these audits during middle and high school vacations when child workers are more likely to enter the workforce. Our inspections found no instances of child labor recruitment among these suppliers. However, we implemented remedial measures for suppliers who lacked facial recognition for identification or did not explicitly include child labor prohibition in their contracts.
* Conducted twice a year in winter and summer, the number of suppliers may overlap between the time periods.
In 2023, we reported policy, process, due diligence activities and plans, and improvement cases to Samsung Compliance Committee to eradicate child labor in our company and suppliers.
The Samsung Electronics Supplier Code of Conduct prohibits suppliers1) from using forced labor and payment of recruitment fees by migrant workers. If a migrant worker pays such a fee, the supplier must compensate the worker within 90 days. We monitor fees and costs in all recruitment processes through dialogue with supplier management and employees. This covers the selection of new suppliers, regular audits through self-assessments, on-site audits, third-party audits, and special audits for forced labor.
Audit findings related to recruitment fees for migrant workers, child labor, and working hour violations are classified as serious forced labor violations. Suppliers risk a downgrade in their assessment rating of comprehensive evaluations or even transaction termination, in severe cases, if they fail to resolve these issues.
In accordance with this policy, we reimbursed USD 14,838 in recruitment fees to 41 migrant workers in 2024. From 2017 to 2024, we reimbursed USD 1,222,121 to 1,937 migrant workers from 11 countries, including Bangladesh, Nepal, and Vietnam. An analysis of annual reimbursements shows a continued decline in recruitment fees, reflecting a decrease in the hiring of migrant workers by suppliers.
As part of our efforts to eliminate forced labor, Samsung Electronics resumed our special audits on forced labor involving migrant workers in 2023, after a temporary suspension due to COVID-19. In 2024, these audits covered all countries with high-risk suppliers employing migrant workers.
A total of 53 suppliers in five countries—Malaysia, Hungary, Slovakia, Poland, and Thailand—were audited using the Specialty Validated Assessment Program (SVAP), RBA’s specialized forced labor program. The audits assessed 22 items, including on-site audit of recruitment agencies, possession of recruitment agency contracts by first-tier suppliers, recruitment fee reimbursement, local language contracts and pay stub provisions, pre-departure introductory training, and remediation procedures and record-keeping. Following the audit of the recruitment agency contracts, results revealed that the suppliers used 57 agencies in 14 countries2) to recruit migrant workers.
Initially, all 53 suppliers had an average compliance rate of 93%, which was generally satisfactory. However, we discovered that some suppliers in Malaysia, Thailand, and Poland had charged workers recruitment fees. In addition, we confirmed 79 audit findings related to the absence of victim remediation procedures, failure to provide pay stubs in the local language, and a lack of due diligence on recruitment agencies. We collaborated with local subsidiaries to support monthly status improvements, ultimately confirming that all audit findings had been addressed and improved.
| Item | Number of findings |
Key finding details |
|---|---|---|
| Prohibition of recruitment fees |
17 | Insufficient policy enforcement and delays in worker reimbursements |
| Provision of travel costs and means within region |
4 | Transportation costs not provided |
| Return transportation costs |
1 | Incomplete records of return transportation payments |
| Job posting | 1 | Insufficient information related to employment conditions |
| Employment contract |
1 | Insufficient information related to employment contract |
| Contract understanding |
2 | Contract not provided in native language |
| Prohibition of changes to terms of employment contract |
1 | Terms changed after employment contract |
| Pay stubs | 9 | Pay stubs not provided in local language |
| Bank account management | 1 | Incomplete records of bank transfers |
| Personal documents |
1 | Inadequate records of personal document storage |
| Storage safety | 1 | Inadequate standards for worker document storage |
| Recruitment service contracts |
8 | Deficiencies in contract content |
| Due diligence on recruitment agencies |
9 | Not performed |
| Victim remediation | 23 | No remediation policies in place |