March 30, 2012
Apple Moves from Laggard to Sector Leader on Transparency
by Robert Kropp
The computer giant agrees to implement remedial action recommended by the Fair Labor Association's
investigation of working conditions at Foxconn factories in China.
The results of the Fair Labor Association's (FLA) investigation into Apple's supplier Foxconn Technology
Group should come as little surprise to concerned observers, considering the attention given to a
rash of suicides in 2010 at one of the plants owned by China's largest private employer.
Apple's response, however—as well as its agreement to have the FLA investigate workplace
conditions at three of Foxconn's plants in China—may well represent an evolution toward greater
transparency at the computer giant since Tim Cook became CEO.
Following the deaths of at
least 17 workers who leapt to their deaths from the roof of an onsite dormitory, members of the Interfaith Center on Corporate Responsibility
(ICCR) issued an Inves
tor Statement, calling on "global brands to disclose the nature and severity of many of the
problems found at these facilities, and what they are doing to address them."
statement also criticized the Electronics Industry
Citizenship Coalition (EICC), saying that the industry organization "could be far more
assertive and proactive in ensuring worker rights." The FLA's CEO Auret van Heerden apparently
agreed with the investors' criticism, telling Bl
oomberg Businessweek. "The electronics industry has lagged behind the apparel and footwear
industry, which has been doing this for 15 years."
Apple has been a particular target of
criticism by sustainable investors. A shareowner resolution filed in 2010 by As You Sow, calling on the company to issue a sustainability
report, stated, "Dell, IBM, and Hewlett-Packard have taken leadership roles…through publication of
comprehensive sustainability reports that address their company's impacts with regards to issues
such as greenhouse gas emissions reduction, toxics, and supply chain working conditions. Apple,
however, lags behind global industry peers on sustainability reporting."
Since then, Apple
has begun issuing an annual sustainability report, and in 2011 began addressing workplace
conditions in its supply chains. However, the company stated that in the event of violations, it
would only "continue to collaborate with the supplier towards further improvement." Effective
supply chain management can be particularly challenging for companies in the electronics sector,
because the number of available suppliers is limited. Foxconn alone employs an estimated 1.2
million workers and, in addition to Apple, partners with Microsoft, HP, and Sony as well.
In February of this year, Calvert Investments expressed its
concern over working conditions in Apple's supply chain, stating, "Apple must take responsibility
for conditions in its suppliers' factories; first and foremost to protect workers, but also to
reassure its customers and investors that the company takes these allegations seriously and will
take appropriate steps to investigate and remedy such abuses."
expression of concern, Calvert did find that Apple "has taken significant steps in recent months,
and especially in recent weeks, towards full supply chain transparency and 'zero tolerance' for
workplace abuses." One of those steps, Calvert said, was joining the FLA.
In January of
this year, Apple joined the FLA, a multi-stakeholder collaboration that conducts audits of
suppliers to ensure that the terms of its Workplace Code of Conduct are being
met. This week, the FLA published its investigation of Foxconn, based on surveys of 35,000 workers
at three of the company's plants. The FLA documented at least 50 violations.
finding is that they've been exceeding the overtime limits," van Heerden said. Not only did the
average number of hours worked per week at Foxconn factories exceed the recommendations of the
FLA's code; the number exceeded Chinese labor law as well.
In response to the finding, the
report states, "Foxconn has agreed to achieve full legal compliance regarding work hours by July 1,
2013, while protecting workers' pay." The commitment will require the reduction of overtime hours
from 80 per month to 36. As a result of Foxconn's commitment, the report continued, "tens of
thousands of extra workers will need to be recruited, trained and accommodated."
major commitment," van Heerden said. "If Apple and Foxconn can achieve that, they will have set a
precedent for the electronics sector."
Additional violations were found in the areas of
health and safety, worker representation, and compensation. In each of the areas, Foxconn committed
to taking remedial action.
In a statement, Apple said, "We appreciate the work the FLA has
done to assess conditions at Foxconn and we fully support their recommendations. We share the FLA's
goal of improving lives and raising the bar for manufacturing companies everywhere."
spotlight is now on the other buyers and brands," van Heerden said. "Are they going to follow suit
and be similarly candid?"
Furthermore, observed Bennett Freeman, Senior Vice President for
Sustainability Research and Policy at Calvert, the responses to the audit by Apple and Foxconn
represent only the beginning of a story that could take years to unfold.
made by Apple and Foxconn are extraordinarily significant, and we applaud Apple's decision to
become the first electronics company to join the FLA and to submit to the audit," Freeman told
SocialFunds.com. "There's a transformational potential to raise the standards for an entire
"But the proof will be in the actual implementation," he continued. "There's a
lot that Apple and especially Foxconn have to do now. Progress on supply chain issues is more often
incremental and takes years rather than months."
To complicate matters further, the FLA
itself has come under criticism for conflicts of interest. Student groups at Cornell University
have called on President David Skorton to end the university's association with the FLA, arguing
that because of its relationships with corporations, many cases of workers' rights violations have
been "covered up," according to the Cornell Daily Sun.
Freeman said, "The FLA's credibility is on the line, and it
is essential that it continues to play its part and insist upon these commitments being delivered."