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Wednesday, February 22, 2012

Strategic CSR - Apple

The article in the first url below comments on Apple’s release recently of its annual audit of suppliers. The highlights:
  • 62% weren't compliant with working-hours limits.
  • 32% weren't compliant with hazardous-substance management practices.
  • 35%failed to meet Apple's standards to prevent worker injuries.

I am trying to decide whether to be shocked at the numbers or applaud Apple for its honesty. The initial impression, however, is one of greater scope and detail in the report:

The report is the most comprehensive on the subject in Apple's history, based on 229 audits of factories that do work for the company, the world's second-largest by market capitalization. While Apple has occasionally divulged selected suppliers, the new list covers those 156 companies that represent 97% of its materials, manufacturing and assembly spending.

Historically, Apple has not had a reputation for CSR that matches its reputation for product innovation. Perhaps this will be one area in which Apple’s new CEO, Tim Cook, can improve on Steve Jobs’ performance at the firm. On the other hand, however, maybe not. Transparency is one thing; performance is something else and the article in the second url below provides more evidence of Apple’s tenuous relationship with CSR. In particular, the New York Times  investigation constitutes a detailed report on Apple’s supply chain in China. The article is long, but one quote is particularly revealing:

‘We’re trying really hard to make things better,’ said one former Apple executive. ‘But most people would still be really disturbed if they saw where their iPhone comes from.’

Contrast this approach with the approach taken by Nike reported in the article in the third url below:

In April 2005, Nike surprised the business community by suddenly releasing its global database of nearly 750 factories worldwide. No laws presently require a company to disclose the identity of its factories or suppliers within global supply chains. Yet, between the early 1990s and 2005, Nike went from denying responsibility for inhumane conditions in its factories to leading other companies in full disclosure — a strategic shift that illustrates how a firm can leverage increased transparency to mitigate risk and add value to the business.

Note: Last weekend (, Foxconn (Apple’s main supplier in China) announced plans to significantly improve working conditions at its factories by increasing wages and reducing hours. If it happens, this is important given that:

Foxconn, with 1.2 million Chinese employees, is one of China’s largest employers. It assembles an estimated 40 percent of the smartphones, computers and other electronic gadgets sold around the world. Foxconn’s decisions set standards other manufacturers must compete with.

The most important point made in the article, however, brought the focus back to where it ultimately resides—with the end consumers:

For that system to genuinely change, Foxconn, its competitors and their clients — which include Apple, Hewlett-Packard, Dell and the world’s other large electronics firms — must convince consumers in America and elsewhere that improving factories to benefit workers is worth the higher prices of goods.

Take care

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The library of CSR Newsletters are archived at:

Apple Navigates China Maze
By Jessica E. Vascellaro and Owen Fletcher
The Wall Street Journal
January 14-15, 2012

In China, Human Costs Are Built Into an iPad
By Charles Duhigg and David Barboza
The New York Times
January 26, 2012
pA1, B10-B11.

just do it: how nike turned disclosure into an opportunity
By Bushra Tobah and the NBS team
Network for Business Sustainability
January 23, 2012