Apple has once again released its Supplier Responsibility Progress Report, which as usual details the performance of the tech giant's supply chain against the tough standards it has set.
This is the 12th such report, Apple says, but it was really seven years ago, after Apple received a lot of criticism for how workers were being treated at some of its suppliers such as contract manufacturing giant Foxconn, that Apple really upped its compliance game and the depth of the report, which set a standard of sorts for how this reporting should be done.
As opposed to an overall Sustainability report, this document is focused specifically on performance by Apple suppliers against its Supplier Code of Conduct, an evolving standard that Apple says now involves more than 500 elements or expected behaviors.
"Constantly raising the bar, finding problems and fixing them, providing advancement opportunities and reporting transparently are fundamental to Apple's supplier responsibility efforts," the report notes early on.
This involves far more than environmental performance. In the highlights section of the 2018 report, for example, Apple cites the following achievements in 2017:
• Training more than 3 million supplier employees on their rights, including local labor laws, and Apple's Supplier Code of Conduct.
• Launching health programming that empowers female employees to improve their health awareness with a goal of training 1 million women by 2020.
• Being named the world's top company for responsible sourcing of conflict minerals by the Enough Project.
• Returning $1.9 million in excessive recruitment fees to 1558 people affected by bonded labor, bringing the total to $30 million repaid to over 35,000 employees since 2008.
What made Apple's effort really change seven years ago was a much greater focus on audits of its suppliers, at multi-tiers of its supply chain, generally performed by what Apple calls "independent, third party auditors."
Apple was among the first to launch these major on-site assessments of supplier compliance with its code of conduct. The report says in 2017 Apple conducted 756 assessments in 30 countries. Not in this year's report but from our coverage last year, that is up from 705 audits in 2016.
In addition, 26% - or 197 total - were first-time assessments.
Each assessed facility is ranked on a 100-point scale based on its performance relative to its Code of Conduct. A score of 90 to 100 is representative of a high performer. A score less than or equal to 59 is representative of a low performer. A score of 60 to 89 is representative of a medium performer.
What's more, interviews and grievance channels that encourage employee voice and communication are fundamental to the audits. After interviews, employees are given a phone number so they can confidentially provide additional feedback to Apple, including anything they consider to be unethical behavior.
As shown in the chart below, it seems to be working, as Apple says it increased the number of high-performing suppliers by 35%, while low-performers decreased by 71%, with much progress over time.
Apple in fact expects its suppliers to continue to build capabilities, and says it has developed more than 150 technical tools it uses to advise suppliers on capability building and process improvement.
And Apple takes detailed compliance with its code very seriously. The report cites one incident, for example, where there was an "Improper Provision of Wages Violation" related to a supplier's failure to pay wages for mandatory pre-shift meeting. In that case, Apple says, "We required the supplier to pay employees for a pre-shift meeting that lasted five minutes."
The 59-page report offers a significant amount of detailed data. Below are some additional highlights:
Apple continues to invest heavily in supplier employee education that has nothing to do with their current jobs, or even business in general. For example, in 2017, efforts to empower women through health education began at several Apple supplier facilities in China and India, with a goal is to enable women in factories to take charge of their personal health and well-being by becoming well-informed of risks specific to women. In China, Apple has partnered with Peking University to develop a rigorous independent evaluation process to measure program impacts.
After auditing those 756 facilities with nearly 1.3 million people, Apple uncovered just two cases of underage labor.
In 2015, Apple launched a Zero Waste Program that provides on-site support to help suppliers learn how to recycle and reuse materials, and divert waste from landfills. In just two years, 100% of Apple's final assembly locations in China had attained Zero Waste certifications, and its newest final assembly facility, which came on-line in 2017, will be certified in 2018. In 2017, Apple expanded efforts globally to include operations in India. Worldwide, 100 percent of iPhone final assembly facilities have achieved their Zero Waste to Landfill certification.
In 2014, Apple launched a Chemical Management Program to help suppliers develop a comprehensive approach to managing chemicals safely. The program provides Apple subject matter experts to help suppliers implement greener, less toxic alternative chemicals in their processes. There are now 113 suppliers participating in the program, up 80% from 2016.
In 2018, requirements were added to our Supplier Code of Conduct for suppliers to set annual carbon reduction goals. To this end, Apple conducts in-depth energy assessments to identify areas for improvement at supplier facilities, and provides them with a cost-benefit analysis of the potential return on their investment for implementing energy efficiency improvements. In 2017, the total number of program participants increased by 77%, and carbon emission reductions increased by 113%.
Apple concludes by noting "Our goal is to help suppliers run more ethical, responsible, and greener businesses. We spend weeks, and sometimes months, with low- and medium-performing suppliers to create facility-specific capability building programs."
Despite all the progress, Apple's says it is looking towards "a future where people feel empowered and respected at work. Where our supply chain is always working to protect our planet. And where our suppliers have the capability to provide an industry-leading workplace."
The full report is available here: Apple Supplier Responsibility Report 2018
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