Apple, Social Responsibility and Procurement: More CSR Pesticides or Going Organic? (Part 2)

Click here to read the first post in this series.

Based on Apple's 2012 Supplier Sustainability report, both in absolute and percentage terms, the largest increase in Apple's auditing programs appears in the "repeat audit" areas. This should not be a surprise, but rather a logical extension of marshaling supplier development efforts to focus on the largest suppliers that Apple continues to do business with. However, the level of first-time audits also hit an all time high for Apple, suggesting that they continue to work their way down to smaller and lower-tier suppliers. It would be fascinating to see the breakdown in results by supplier based on size, number of times audited and specific region, but alas, Apple does not provide us with these details. But it is worth noting that Apple did introduce two new categories of audits that it broke out separately for 2012: Process Safety Assessments and Specialized Environmental Audits. Of its total audits, roughly 10% (27 in total) comprised the former and just over 5% comprised the latter, of these two newly broken out categories.

In the area of labor and human rights, Apple shared some findings that those isolated from the world of global sourcing might find surprising. To wit, "18 facilities screened job candidates or current workers for hepatitis B, and 52 facilities lacked policies and procedures that prohibit discrimination based on results of medical tests." Moreover, "24 facilities conducted pregnancy tests, and 56 facilities did not have policies and procedures that prohibit discriminatory practices based on pregnancy." Yet overall, Apple's found its overall compliance for the "labor and human rights" area of its supplier audit scorecard hitting 74% based on supplier practices in compliance. However, the clear outlier for this area was "working hours," with only 38% of suppliers in compliance. Not surprisingly, there seems a fairly direct correlation in most places between supplier compliance and supplier management systems in this area (e.g., only 38% of suppliers had management systems in place to monitor working hours).

Apple is definitely following a "stick" approach, at least in part, in the area of labor and human rights. For two "repeat offenders" in the involuntary labor area, Apple took serious action, including "terminating business with one supplier" and "correcting the practices of another." And when it comes to underage labor, Apple discovered 5 facilities with (6 active and 12 historical cases) of underage labor. However, what goes unreported in these findings is what Apple is doing to combat underage labor at lower-tier supplier levels. Given the focus on addressing repeat offenders and not changing social and business cultures of behavior but rather putting in place "management systems" alone, it's our guess that Apple has a much larger underage and broader labor and human rights problem that its own self-reported data is showing.

- Jason Busch

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