The Magazine of Corporate Responsibility

Apple Expands Supplier Responsibility Program

by James Hyatt

Apple Inc.’s latest Supplier Responsibility report shows a 25% increase in audits of supplier facilities during 2010 to establish compliance with the company’s standards for hiring, training and worker safety.

The computer and electronics firm said it has “worked aggressively to prevent the hiring of underage workers” and is “leading the industry by requiring suppliers to return underage workers to school and to finance their education.”

Apple FactoryApple said in 2010 it had terminated business with three firms where management failed to show a serious commitment to Apple’s supplier policies.

The report also spelled out efforts by Apple and its supplier Foxconn Technology Group to address suicides at a Foxconn facility in Taiwan.  Apple said a report by an independent team of suicide prevention experts found that Foxconn had taken quick action, including hiring psychological counselors, establishing a 24-hour care center, and even attached large nets to buildings to prevent impulsive suicides. “The investigation found that Foxconn’s response had definitely saved lives,” Apple said.

The report for 2010 tallied 97 first-time audits of supplier facilities, up from 83 in 2009 and 30 repeat audits, up from 19.  Since 2007, Apple has audited 288 supplier facilities.

Apple said it has spent considerable effort to address exploitation of workers, often involving cases where immigrants who move from their home country to work in factories elsewhere are “charged exorbitant fees that drive them into debt.”  Apple classifies such practices as involuntary labor.

Apple labels as a “core violation” any practice or situation it considers contrary to the core principles of its Supplier Code of Conduct.  Its audits turned up 37 core violations in 2010, up from 17 in 2009.  Eighteen of the violations involved excess recruitment fees to labor agencies.  Apple said it has required suppliers to reimburse $3.4 million in excessive fees to workers since 2008.

Another 10 core violations involved underage labor at facilities in China. At one facility, 42 workers were underage and “we determined management had chosen to overlook the issue and was not committed to addressing the problem.”  Apple said it dropped that facility as a supplier.

At four facilities, audit materials were falsified; at another, a manager offered cash to auditors seeking to reduce the number of audit findings.   One core violation involved a chemical exposure and another involved unsafe elevated work without guardrails or safety harnesses.

To address the problem of underage workers, Apple said it has provided stronger age-verification tools, educated managers about dealing with third-party recruiters, and held managers accountable for recruiting practices of affiliated schools and labor agencies.

In 2010, Apple said more than 16,000 workers were enrolled in its computer-based learning program, which includes classes in English and in computer and technical skills.

It required management from all Taiwanese suppliers to attend a workshop on Prevention of Involuntary Labor, and invited government officials fro Taiwan, Thailand and the Philippines to provide information on laws about hiring foreign workers. The program will be expanded to suppliers in Malaysia and Singapore in 2011.

Apple spelled out efforts to require suppliers to use metals procured through a “conflict-free” process.  The issue involves metals including tantalum, tin, tungsten and gold believed to “fuel political strife in the Democratic Republic of Congo and neighboring regions.”  Small amounts of such metals are used in electronics components.  Apple is part of a working group that seeks to validate that smelters use “conflict-free” metals.

Apple said of suppliers audited in 2010, “more than 40 percent stated that Apple was the first company ever to have audited their facility for social responsibility compliance.”

The company said its audits found a number of facilities that used discriminatory practices in using medical or pregnancy tests; 76 facilities where records indicated workers exceeded weekly working-hour limits; 64 facilities with engineering safety violations; 54 facilities where workers weren’t wearing appropriate personal protective equipment; 80 facilities which weren’t properly storing or handling hazardous chemicals; and 37 that failed to monitor and control air emissions.

The complete supplier management report is available at Apple’s Investor Relations website.

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