Apple Launches Clean Water Program for Suppliers, Increases Audits and Training

| Analysis

Apple released its first 2014 update to its Supplier Responsibility Report Thursday, the company's effort to be transparent about worker safety and conditions, and environmental issues within its supply chain. In that report, Apple said that it launched a water recycling program in 2013, that it increased the number of supply chain audits, and that it trained some 1.5 million workers on their rights.

Apple has a landing page for the report, a PDF of the full report, and a separate page for highlights.

Apple Worker

A Worker Inspecting a MacBook Air Case
Source: Apple

Clean Water Program

According to Apple, the Clean Water Program is an effort to not only ensure that Apple suppliers have all the right local permits, but to improve the way those companies process water and to increase water recycling.

"To make sure our suppliers are part of the solution to preserve this resource," the company wrote, "Apple instituted the Clean Water Program to help reduce water usage, promote water recycling, and prevent illegal water pollution within our supply chain."

Apple chose 13 supplier sites to launch the program, sites that, "collectively use more than 41 million cubic meters of water per year. [...] In 2014, we’ll apply the findings and best practices from this pilot program to other suppliers with water-intensive production processes."

With fresh water predicted to be one of the major challenges facing mankind in the 21st century, Apple appears to be in the forefront of Western companies looking at this issue within its supply chain.

Audits

According to Thursday's updated report, Apple has dramatically increased the number of audits it conducted on its suppliers in 2013 to 451, an increase of 51 percent over the 298 audits conducted in 2012. It's also an average of 1.23 audits every day of the year.

All told those audits covered sites where 1.5 million people work on making Apple products, and Apple claimed compliance with its standards between 75 percent and 99 percent, as shown in the chart below.

Apple Chart

Source: Apple

Worker Rights Training

One of the major sources of criticism for Apple has been worker rights and working conditions in the factories owned by Apple's manufacturing partners. One reason so much manufacturing has left the U.S. and moved to the developing world—especially China—is that salaries are a tiny fraction of those earned in the U.S., and because governmental oversight over the environment, pay, overtime, and safety is effectively laughable.

As was the case in the U.S. before labor unions fought back in the late 19th and early 20th centuries, today's manufacturing in China is proof that capital—i.e. factory owners—will often try to get away with everything that they can. That includes unsafe worker conditions, insanely long working hours, and work weeks in excess of 80 hours per week.

Apple has held its contractors to a higher standard than local regulations require, and certainly greater than actual conditions on the ground, but not all suppliers have met Apple's requirements, as documented by many activist groups.

To help, Apple has been offering education courses designed to help train workers in their own rights. In 2013, the company said that it trained 1.5 million of its workers on their rights, with a cumulative total of 3.8 million workers receiving rights education since 2007. Both numbers are impressive, and Apple offered this chart to demonstrate progress in this area:

Apple Chart

Source: Apple

Pressure and Results

Apple began issuing Supplier Responsibility Reports in 2011 in the midst of intense criticism of working conditions at third party manufacturers, particularly in China. While the workers making Apple devices received higher pay than other workers, and while Apple worked harder than other Western electronics firms on maintaining safe worker conditions, Apple's position as the most profitable tech company on the planet made it the focus for activist groups and others interested in worker rights.

Such is corporate life when you make many billions of dollars in profits every quarter—you get held to a far higher standard than the Dells of the world.

At the same time, the reality is that Apple not only stepped up its already best-in-class supplier management efforts, Apple also stepped up its transparency efforts, including this quarterly report.

It remains to be seen if the company gets any credit for its progress, or if Apple's competitors will get anything approaching the same scrutiny from the mainstream press (Hint: they won't).

That said, The New York Times, which has published a number of highly critical pieces about Apple's supply chain, focused on the fact that Apple reported that the tantalum smelters used by its suppliers were conflict-free in a piece that was mostly positive.

Comments

Lee Dronick

Good news!

wab95

Bryan:

The community around Apple, no less than the star-studded galaxy of analysts, critics, naysayers and the popular press, will one day make for a fascinating and indeed revealing treatment of the dynamics that comprise what we loosely title ‘human psychology and behaviour’.

A key component of this analysis will no doubt dwell upon the co-existing duality, the double-standards if you will, tolerated by a society comprised of literate, intelligent and otherwise high-minded people with access to real and near-real time information, and the forces at play that permit, indeed foster, that tolerance for a double-standard.

It is a case study, in my mind, of the distinction between justice, which is the rendering of a judgement or application of the law to an entity (person, institution, business or category of entity) in a specific instance, and fairness, which is symmetrical application of justice to all in similar circumstance.

In my mind, a critical aspect of why the public, not just the Western public, but the global community, hold Apple to standards that are not even raised in public fora for their competitors and peers, is the public’s lack of emotional investment in these other entities. Not just supporters and happy clients, but critics and enemies of Apple, particularly those who despise all things Apple, have an emotional investment in the company. This is the inevitable byproduct of mindshare - that people become emotionally invested in something that dominates their attention and thoughts.

For the most part, neither the clients nor the general public nor critics nor the press have sufficient emotional investment in most of these other companies to hold them to standards or care if they adhere thereto.

FCompton

wab95:  excellent insight! Parallels my thoughts as well.

Lee Dronick

I can visualize the talking heads “China is experiencing severe smog problems. Most of Apple’s factories are located in China.”

mrmwebmax

+

wab95, great insights as always. To yours I will add another curious duality:

Apple is only successful when it works against them. When they are considered the most successful company ever, they are held to a higher standard when it comes to the environment, product recyclability, workers’ rights, etc.

When not considering the environment, product recyclability, workers’ rights, etc., Apple is doomed because of a lack of innovation, because of the death of Steve Jobs, because of the lack of a 17.5” iPhone, etc.

And, of course, any article that is actually pro-Apple—outside of TMO and The Macalope—is dismissed as pure fanboi hype, because obviously nothing ever can be said good about Apple that isn’t a result of buying into the religion, drinking the Kool-Aid, etc.

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