Currently Being Moderated

4692108470_abd3a06d1c.jpgHere we go again. Six months ago, I presented my thoughts about a report by Chinese NGO Institute of Public and Environmental  Affairs (IPE) that leveled complaints against the IT/Electronics  industry and the overall performance of nearly 30 major manufacturers  and their respective key parts suppliers.  The report focused on “the  openness of IT firms and their responsiveness to reports of  environmental violations at suppliers”.  Concerns were raised in the  report regarding levels of environmental toxins and pollutants being  discharged in rivers and streams and into air sheds.

 

Worker  complaints about unsafe working conditions and acute health problems  were presented.  The IPE gave opportunities to every company referenced  in the report to initiate an open and two-way dialogue, and most did  …except Apple Electronics.  According to the report,  Apple was more secretive about its supply chain than almost every other  American company operating in the China.  Apple came up among the  laggards among 29 major electronics and IT firms in a transparency study  drawn up by a coalition of China’s leading environmental groups.


These  are the iPad and iPod guys for crying out loud!  The evolutionary  wizards who have shaped and fundamentally changed the way that most  consumers behave, work, interact and get on with their daily lives.   Those guys who at one point this summer became the wealthiest company in the United States…this before iconic CEO Steve Jobs retired.


Apple- Skinned Again


Following the early 2011 report, the IPE performed five more months of research and field investigations and reported that “the  pollution discharge from this enormous industrial empire has been  expanding and spreading throughout its supply chain, seriously  encroaching on the local communities and their environment… the volume  of hazardous waste produced by suspected Apple Inc. suppliers was  especially large and some had failed to properly dispose of their  hazardous waste.”

 

The IPE reported (rather colorfully I might  add) that 27 suspected suppliers to Apple had known environmental  problems.  The IPE noted that in Apples ‘2011 Supplier Responsibility  Report’, “where core violations were discovered from the 36 audits,  not a single violation was based on environmental pollution. The public  has no way of knowing if Apple is even aware of these problems. Again,  the public has no way of knowing if Apple has pushed their suppliers to  resolve these issues. Therefore, despite Apple’s seemingly rigorous  audits, pollution is still expanding and spreading along with the supply  chain.”


IPE reported that “during the past year and four  months, a group of NGOs made attempts to push Apple along with 28 other  IT brands to face these problems and the methods with which they may be  resolved. Of these 29 brands, many recognised the seriousness of the  pollution problem within the IT industry, with Siemens, Vodafone,  Alcatel, Philips and Nokia being amongst the first batch of brands to  start utilizing the publicly available information. These companies then  began to overcome the spread of pollution created by global production  and sourcing, and thus turn their sourcing power into a driving force  for China’s pollution control. However, Apple has become a  special case. Even when faced with specific allegations regarding its  suppliers, the company refuses to provide answers and continues to state  that “it is our long-term policy not to disclose supplier information.

 

The IPE offered its opinion that “Apple  has already made a choice; to stand on the wrong side, to take  advantage of the loopholes in developing countries’ environmental  management systems, and to be closely associated with polluting  factories.”


IPE concluded that Apple needed to own up and be accountable for its supply chain for the following four reasons:

  1. “…  any company that produces a large amount of hardware must bear the  responsibility for the environmental and social costs incurred during  the manufacturing process.
  2. Secondly, the suppliers who violate  the standards for levels of pollutants emitted and who ignore  environmental concerns and workers’ health do these things with the aim  of cutting costs and maximizing profits.
  3. Thirdly, Apple Inc.  understands that when passing the blame for social responsibility it can  be difficult to pull the wool over the eyes of the general public…; and
  4. Fourthly,  many people do not understand that Apple and other brands’ outsourcing  of production is not the same as ordinary purchasing behavior. Various  sources of information show that Apple is deeply involved in supply  chain management—from the choice of materials to use to the control of  clean rooms in the production process."


So What’s Wrong With Apple?


Apples  image problem appears to be getting worse before it gets better and it  may be more than just a public relations problem; and it’s not just in  China that Apple is facing criticisms.  Apple, like most consumer  electronics manufacturers is a major user of highly sought after  precious minerals, many of them associated with conflict areas  (so-called ‘conflict minerals’). Apple in fact sources tin from 125  suppliers that use 43 smelters worldwide.  That’s an awful big challenge  from a supply chain management perspective. But Apple was still a bit  slow to step up like other key IT companies like Dell and Intel and  collaborate with the Electronics Industry Citizenship Coalition in  developing a framework to address conflict mineral traceability.

 

Further complicating the issue is the sheer size of Apples supply chain and the general difficulty that comes in managing dispersed multi-tired supply chains in other countries.  In an excellent piece published in GreenBiz this week, Environmental Defense Fund Project Manager Andrew Hutson suggested that  "If you've got an office in Shenzhen or Hong Kong, it's very  hard to keep tabs on the perhaps thousands of factories you have across  China in any given moment". The article went on to discuss how scrutiny can sometimes  lead contractors to move factories to more remote areas, farther away  from watchdogs, suggesting that "the sheer distance from headquarters created by chasing low-cost labor  to developing countries can effectively reduce accountability". While cheap labor in far off lands certainly has its benefits, clearly it has its disadvantages and Apple is paying the price.


Many  people have asked me over the past half-year why Apple is being  uncooperative or secretive.  Well, “secrecy” has always been part of the  Apple mystique, but of course so has evolutionary and disruptive  innovation. The problem is when it comes to corporate social  responsibility and sustainability, transparency is the name of the game,  not secrecy.  In this “WikiLeaks” world of ours, mystique only gets  companies mired deeper into areas of suspicion and distrust.


But perhaps there is more to the issue to noodle on. Is it entirely  possible that Apple isn’t ignoring the problem, but rather its supplier  network is just too big to handle and they lack the tools, systems and  technologies to perform adequate supplier training and oversight?  Or is  it that Chinese regulatory agencies also lack the resources or  institutional oversight necessary to monitor compliance over in-country  industrial manufacturers that service multiple consumer brands?  Or is  it possible that as consumers our insatiable appetite for Apple products  is partly responsible for creating such high demand that Apple must  reach out to hundreds if not thousands of suppliers to fulfill its  orders and keep Apple product lovers happy?   Or is the problem a  combination of rampant, unsustainable consumerism, poor regulatory  oversight, a supply chain ‘gone wild’, AND a deviated moral center on  the part of Apple (as the IPE suggests).  You see, its  complicated and maybe, just maybe, we should all take a close look in  the mirror and question our own culpability in this mess.

 

For  any of my dedicated readers, I am by no means being an apologist for  Apple.  You all know where I have stood in the past by constructively  calling for Apple to step up and be as evolutionary on corporate social  responsibility and sustainability matters as it is with its products.  I  noted in my prior post the many key steps that Apple can and must take to effectively make a difference in its supply chain.  In addition Treehugger writer extraordinaire Jaymi Heimbuch offered some outstanding advice to new CEO Tim Cook, not the least of which was “requiring transparency  in the supply chain and being more direct with suppliers about  standards”.  My advice is simple Mr. Cook: show humility, take responsibility, and act swiftly and collaboratively.


Rest  assured there are more activist organizations shaking Apples tree.  And  what I fear (as Apple should too), is that one day all that shaking  will bring that big old tree down.

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