Apple and Supplier Audits — How Far Does the Apple Fall From the Green/CSR Tree (Part 2)?

In the first post in this series, I analyzed trends in Apple's supplier auditing programs and shared a bit of input on how both physical and virtual audits may allow the tech giant to extend its supplier management reach even further in the future. In this second post in this series, I'll continue our investigation into Apple's 2011 Supplier Responsibility Progress Report, highlighting areas I think warrant attention (and in many cases, have been overlooked in favor of sensationalist headline findings that garner more attention). Perhaps first and foremost, it's important to note that Apple's approach to supplier responsibility extends beyond just auditing. It also factors into account training, factory management education programs, NGO collaboration (please, don't hold your breath on the effectiveness of this one) and programs with teeth "designed to hold suppliers accountable for their practices" -- the reading and practice of which is very much open to interpretation based on where you sit.

According to the report, Apple appears to be focusing on-site efforts primarily on auditing what it terms "high-risk facilities." Among other areas, Apple completed "full audits" at all 20 of its supplier facilities in Taiwan. Within China, Apple "intensified its search for underage labor" by interviewing workers and looking closely at recruiting practices. In one case, it found a single facility with 42 labor violations involving underage workers (who were age 15 or less), and terminated its business. Spend Matters readers should note the legal age to work in China and many other emerging markets is 16, which would still be classified, in a full-time setting in a hazardous manufacturing environment, as "child labor" in the US (the definitions are a bit complex in the US, depending on the type of labor and specific requirements of the job). In total, according to Apple's own reporting, the company found 91 cases of underage labor.

One of the more insightful -- and potentially disturbing -- findings in the report is that of all of the suppliers that Apple audited in 2010, over 40% reported that Apple was the first company to "have audited their facility for social responsibility compliance." When Apple goes on-site to audit a supplier, they suggest an Apple employee, a "supplier responsibility auditor," leads the effort with the additional support of local-third party professionals. Apple supplier factory audits combine multiple elements including interviews with workers, interviews with senior management, physical inspection of facilities and reviews of records. Spend Matters believes this approach is fairly standard on a structural level, but the balance and depth of investigating such areas as labor, human rights, ethics, health and safety, environmental impact and management focus/responsibility/direction can vary materially between companies.

- Jason Busch

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