Worker safety has definitely captured the negative headlines for Apple the most in the past twenty-four months. But their code of conduct in the area of environmental impact might just be more important for those in the broader procurement and supply chain professionals. After all, Apple's actions (or lack thereof) around worker safety are tacitly one-upping local labor practices and expectations (safety nets for potential jumpers don't exactly address problems at the source).
In focusing on the environment, Apple considers six core areas in its scorecard: hazardous substance management, wastewater and stormwater management, air emissions management, solid waste management, environmental permits and reporting and pollution protection and resource allocation. Overall, Apple notes that the company itself -- a small shift from the wording in the rest of the report -- takes "responsibility for minimizing the environmental impact of our operations and products." However, Apple has only started to rigorously monitor suppliers in this area, conducting specialized environmental audits at just 14 facilities in 2011. These audits consisted of "onsite inspections of wastewater treatment facilities, air emissions handling, solid waste disposal, and noise abatement systems both at the facility and in the surrounding areas" as well as "interviews with local residents." Apple admits that "there is still a lot of work to be done" in this area, but it appears they will be devoting more auditing and monitoring firepower to this area based on a few statements it makes as well as its actions.
For one, Apple appears to be following the 80/20 rule by pareto ordering the categories where auditing and monitoring for environmental protocols can have the highest impact (e.g., PCBs). Moreover, Apple is requiring its largest suppliers, those "representing more than 90 percent of Apple's final assembly capacity to...index their sustainability reports," to a global standard. Yet as anyone who has spent time in China or other emerging markets knows, plant managers can often find ways of pushing aside environmental requirements -- as well as masking actions or a lack of compliance initiatives -- in times of high capacity requirements. We'd wager a bet here at Spend Matters that Apple knows this as well, and given supply and production constraints hindering even better top line performance in its recent stellar quarter, that its detailed environmental audits of the 14 facilities it referenced occurred less frequently when Apple suppliers had to do everything possible to flex capacity to meet demand requirements.
We'll continue to explore the topic of environmental compliance (given its importance) in the next post in this series.