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To advance our responsible sourcing goals, we invest heavily in our supplier relationships. Since , our Responsible Sourcing program formerly called Social and Environmental Accountability has been in place to help our hardware and packaging suppliers in the Devices and Cloud Supply Chain conform to requirements including our Supplier Code of Conduct to show continuous improvement.

We are committed to improving activities, processes, products, and services associated with Microsoft Device sourcing, manufacturing and packaging, supply chain, and quality organizations; Surface devices design and development; Microsoft Ireland Operations Limited facilities and waste management, Microsoft Munich HQ facilities and waste management, and Microsoft Operations Puerto Rico's processes associated with physical media, and data center operations.

Microsoft also recognizes our important role in enabling and empowering people to achieve the UN Sustainable Development Goals SDGs including, but not limited to, mitigating the impacts of our operations. To learn more about Microsoft Devices FY20 contribution toward achieving the UN sustainability goals, download a summary report. In the downloadable FY21 Devices Responsible Sourcing Report , we outline what we have done to join in the global efforts of individuals, NGOs, governments, and enterprises to meet the SDGs, improve people's quality of life, protect the environment, and foster equitable growth.

Microsoft seeks to hold our suppliers to high standards for responsible sourcing. Each year, Microsoft publishes a list of our top production suppliers for our commercially available devices. Essential to our compliance management system is supplier monitoring through third-party audits.

Auditors use standard protocols and tools developed by the Responsible Sourcing RS team to identify whether suppliers are in conformance with Microsoft standards. Microsoft implements a supplier lifecycle management program to drive supply chain compliance and sustainability and ensure workers who make our devices are treated with equity and dignity.

The program starts with onboarding and sustaining risk assessments and audits of all directly contracted suppliers and addressing risks with corrective and preventative action. In risk assessment, we evaluate efforts to source responsibly based on the social, environmental, health and safety opportunities, as well as risks identified in our supply chain.

We actively monitor percent of all directly contracted supplier facilities involved in our Responsible Sourcing program. In FY20, all factories were monitored through a risk-based approach via tools including risk assessments, factory visits, and third-party audits. We completed social and environmental accountability audits and assessments of active factories, including third-party audits and corrective-action audits.

More than 5, workers were interviewed to understand their working conditions and crosscheck information from other sources, ensuring risk areas were fully identified for improvement. The AMS enables our Responsible Sourcing program to address supplier complexity across hundreds of factories through quick access to business intelligence regarding current and historical audit information. Users have the flexibility to upload, manage, and extract data about multiple suppliers from "one source of truth" and initiate workflows to manage follow up and resolve corrective actions.

Recognizing the vast number of raw materials and the complexity of our supply chain, Microsoft uses a risk-based approach to assess our raw material sourcing. The framework we use is aligned to the UN Framework for identifying salient human rights issues, and we conduct due diligence aligned to the OECD Due Diligence Guidelines on raw materials.

This considers the following dimensions: risk to our supply chain, material-specific social and environmental risks, and our ability to influence and impact production of those materials to assess and prioritize addressing the social and environmental risks associated with raw materials.

We engage our contracted hardware and packaging suppliers directly in our accountability process. Our goal for in scope suppliers is to increase their capabilities according to a maturity of their management system that we call "SEA Stages. This helps suppliers to cultivate and foster their own Responsible Sourcing culture. Each of our suppliers is expected to demonstrate compliance with all applicable laws, regulations, and our specifications. To ensure continuous improvement, suppliers must evolve their focus from reactive risk management to strong management systems and a preventive mindset.

This transformation allows them to proactively mitigate risks, monitor performance, and continuously improve. Ultimately, we expect our suppliers to integrate Responsible Sourcing practices into their overall business management and culture. This involves engagement at all levels of the supplier's organization and is an embedded strategy in all Devices categories. Our engagement extends beyond assessments and audits. Microsoft sees advances in supply chain technologies as being key functional horizontal components enabling success in many industries including retail, manufacturing, energy, and agriculture.

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