Apple, Social Responsibility and Procurement: More CSR Pesticides or Going Organic? (Part 6)

Click here to read previous posts in this series: Part 1, Part 2, Part 3, Part 4, Part 5.

Within its breakout of environmental auditing records of 14 supplier facilities, Apple reports a few findings around hazardous substance management. These include reports showing that over 33% (5) of the facilities audited had "no secondary containment and rainshelf for hazardous chemical storage." Moreover nearly two-thirds (9) of the audited facilities "made handling errors including lack of signs of waste storage, hazardous waste mixed with non-hazardous waste, and mislabeling or miscategorization of hazardous wastes." Given that Apple only surveyed 14 supplier facilitates in total and these facilities were likely larger suppliers (and more sophisticated suppliers) given Apple's track record of using an 80-20 pareto approach to selecting which suppliers to target first, these numbers are shockingly high, even though Apple reported overall in the areas of hazardous substance and wastewater management, that 68% and 89% of practices were in compliance.

It's our guess that when environmental practice and reporting comes down to the individual hazardous substance level, that both Apple and its suppliers are woefully unprepared for the task at hand (it's worth noting this is true across high tech and other industries as well). The challenge in directly managing practices and certifications for toxic substances (e.g., collecting and reporting information, managing escalations) not to mention collaborating with third-parties (e.g., audit firms) who are also collecting information across potentially thousands of SKUs and bills of materials is absolutely huge. Consider, just as one example, the challenge of coordinating third-party information gathering and tying this information into a central information repository besides Excel, around both traceability and potential infractions.

It's our guess that over 90% of what Apple, its suppliers and its audit firms are working on in this area is largely un-automated at this stage (greater automation would result in the ability to conduct and report on far more audits with a much greater frequency of auditing). Perhaps the best investment Apple could make on behalf of its supply chain in this area would be a toolset used internally, by lower-tier suppliers and third parties that enabled automated workflow, escalations, exception handling and specific task assignment (and monitoring/management) based on reported information -- or a lack of reported information, for that matter. However, until Apple (and others) can take supplier information management efforts down to the material and toxic/hazardous substance level on a SKU/item basis, such automation is likely to prove difficult.

- Jason Busch

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