Profile: Fairphone brings ‘change to your hands’

We meet with Eva Gouwens, the Dutch entrepreneur shaking up the smartphone space, who believes a fairer electronics industry is possible, by manufacturing products which lasts longer, from ethically-sourced materials

Fairphone is the company that says it cares for people and planet, and affirms “from the earth to your pocket, a smartphone’s journey is filled with unfair practices. We believe a fairer electronics industry is possible. By making change from the inside, we’re giving a voice to people who care.” 

CEO Eva Gouwens tells Impact Investor her awareness of environmental and social issues was awakened as a student, “but it was when I spent 13 years working for big corporates that I started to understand what needed to be done”.  

She chose to take on that challenge herself, joining a small startup company in Holland, Tony’s Chocolonely which was founded to combat slavery in the cocoa trade. “We wanted to show that an alternative was possible – it was needed and feasible to eliminate slavery in the cocoa chain.”  

The business was so successful it actually became market leader in chocolate bars in the Netherlands, and then moved out across Europe. It also enabled Gouwens to take a particularly impressive title: ‘First Lady of Chocolate’.  

Gouwens says Fairphone really started as an awareness campaign around conflict minerals in electronics. It was founded by Bas van Abel in 2010 to create a market for ethical electronics.  

Abel has since moved on to another startup in the waste industry, handing the reigns of the day-to-day business over to Gouwens, although he still sits on the supervisory board. 

Uncovering supply chains

Gouwens explains that, after a few years of campaigning, in 2013 “it was decided we needed to make phones ourselves, and Fairphone undertook a massive crowdfunding exercise, raising 325 euros per person from 25,000 people across Europe”. The Netherlands was the biggest source of funds. 

Bethnal Green Ventures, recently profiled by Impact Investor, has been a key investor from the beginning and Gouwens hopes more impact investors will get involved to drive the awareness of sustainability in the smartphone market. 

Gouwens says: “We want to transform the industry and our way of doing that is by making a smartphone which lasts longer and that is sourced in an ethical way.” She admits that making a smartphone is a lot more complicated than making a bar of chocolate. “The latter has only seven main components whereas the smartphone has as many as 400.”  

In order to have an impact on the fair sourcing of materials, Fairphone looked at the main forty materials in a phone, and determined that there are fourteen of them which are the most important for the electronics industry as a whole. They also all have pressing issues in the supply chain. 

Complex but rewarding

“It is very much the case that we want to create broader change, we want to have a catalytic effect. To do this we investigate all of the materials and look at what their social and environmental consequences are.” This varies, so for example in plastic, it’s really all about recycling, whereas with gold, it’s about the mining practises, working conditions and even child labour. 

In order to bring about fair sourcing in those fourteen materials Fairphone has chosen, Gouwens says it’s necessary to investigate and uncover the full supply chain, a time-consuming task that can vary radically between materials. The range of materials is broad – everything from golden to plastic, with as varied elements as cobalt, lithium, tin, and tungsten in between. 

Gouwens says that she’s “not yet in a position to source and integrate all fourteen of those 100% fairly”. Gold, for example, is used in several different components in a smartphone, and each of these will tend to come from different suppliers. It is necessary to convince all of the suppliers of the need to move towards fair trade. 

“It’s super complex running this kind of green commercial model, but very rewarding. It will take a while to implement but we do an impact report each year on how we are getting on with sourcing fairly.”  

Gouwens says in 2021 Fairphone launched a new phone, 31% of which was fairly sourced. Her ambition is to take this to 70% by 2023, though she admits “this will take a lot of work”.  

Fairphone strategy 

Fairphone has a wonderful marketing slogan. “Change is in your hands.” It seeks not just to sell phones across Europe but according to Gouwens “to establish a new market for ethical phones”.  

The Fairphone phones are modular phones built up from seven different elements/modules. This enables individual parts to be replaced so their business is not just about selling the complete phone itself, but also about selling individual parts such as batteries. 

The main challenge for Gouwens is Fairphone’s size, in what she observes is a huge industry dominated by enormous players. She says these players have created “an addiction amongst consumers to constant change which has made the smartphone industry essentially an industry of disposable products. The consumer has been triggered into feeling that they have to have whatever is the most up to date product”.  

In Europe, the average life of a smartphone is just 26 months and less than 15% of phones are recycled properly. Gouwens says “this leads to a tremendous amount of electronic waste which is simply not sustainable.” This is why it is important for her to extend the life of smart phones. “We need to move away from companies only making money by selling completely new devices and innovate on new business models.” 

Since its foundation, Fairphone has sold over 400,000 smart phones and last year alone sales were nearly 100,000. The biggest market by far is Germany where apparently all the major suppliers offer Fairphones, followed by France, Austria, and the UK.

In terms of the future Gouwens says “scaling up is the main priority as it would dramatically increase the company’s ability to negotiate with suppliers and ensure more changes in fair sourcing”.  

To this end she has a target of selling 500,000 phones a year and has been seeking further investment backing from impact investors.