Case Study: Apple

Apple's profile

Apple Inc. (hereafter Apple) was established in 1977 and is registered on the NASDAQ Global Select

Market exchange. According to its Form 10-K ‘Apple designs, manufactures and markets mobile

communications, media devices, personal computers and portable digital music players, and sells a

variety of related software, services, peripherals, networking solutions, and third-party digital content

and applications’. Its products are sold through Apple’s retail stores, online stores and third parties.

Apple is a world leader in producing innovative electronic goods and technology. In 2011 Apple’s net

sales were estimated at $108.2 million. Its net sales in 2011 increased by 60% compared to 2010. Apple

worldwide employs 60,400 full-time people and 2,900 temporary employees and contractors. The

company utilizes outsourcing through the manufacturing of its products overseas; most of the factories

are located in Asia.

Apple’s CSR policies and reporting

As required by the SEC, Apple has made the Form 10-K annual report available on its website. The Form

10-K contains – amongst other things – information on Apple’s business strategy and organization, the

company’s risk factors, legal proceedings and financial data. It also includes the business conduct policy

of Apple: ‘Apple conducts business ethically, honestly and in full compliance with all laws and

regulations. This applies to every business decision in every area of the company worldwide’.

Furthermore, the business conducts deals with corporate governance, information disclosure, non-

corruption and bribery, environmental health and safety. Apple has considered the GRI G3.1 indices

relating to the economy, the environment, human rights, society and labor for its publication on

Governance, Product Environmental Reports, Recycling and Facilities Environmental Report and Supplier

Responsibility. For Supplier Responsibility, Apple, for example, has taken into account the indicator

which reports on measures it has taken to contribute to the elimination of child labor. With regard to

Product Environmental Reports, Apple has used the EN26 performance indicator, and sets out

initiatives to lessen the environmental impact of its products. Apple designs its products with the aim of

being as energy efficient as possible, and it is the only company that can claim all electronic goods are

Energy Star qualified. Apple’s products have become more powerful while, at the same time, fewer

materials are used and fewer carbon emissions are generated. Almost all of Apple’s products are

outsourced for manufacturing overseas. On its Supplier Responsibility website Apple states: ‘Apple is

committed to the highest standards of social responsibility across our worldwide supply chain. We insist

that all of our suppliers provide safe working conditions, treat workers with dignity and respect, and use

environmentally responsible manufacturing processes. Our actions – from thorough site audits to

industry-leading training programs – demonstrate this commitment’. The Supplier Code of Conduct

(Supplier Code) outlines Apple’s expectations for the suppliers it does business with. As a condition for

doing business with Apple, suppliers have to commit to the Supplier Code. For the Supplier Code, Apple

has adopted the Electronics Industry Code of Conduct (EICC), the guidelines and standards for the

electronics sector. Through onsite audits Apple ensures that suppliers comply with the Supplier Code.

The final assembly manufactures are audited every year and the components suppliers are audited

arbitrarily. Apple obliges its suppliers to respect the human rights of its workers, to inform the workers

of their rights, and to treat them with dignity and respect. Apple requires from its suppliers that they

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Case Study: Apple

Apple's profile

Apple Inc. (hereafter Apple) was established in 1977 and is registered on the NASDAQ Global Select Market exchange. According to its Form 10-K ‘Apple designs, manufactures and markets mobile communications, media devices, personal computers and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications’. Its products are sold through Apple’s retail stores, online stores and third parties. Apple is a world leader in producing innovative electronic goods and technology. In 2011 Apple’s net sales were estimated at $108.2 million. Its net sales in 2011 increased by 60% compared to 2010. Apple worldwide employs 60,400 full-time people and 2,900 temporary employees and contractors. The company utilizes outsourcing through the manufacturing of its products overseas; most of the factories are located in Asia.

Apple’s CSR policies and reporting

As required by the SEC, Apple has made the Form 10-K annual report available on its website. The Form 10-K contains – amongst other things – information on Apple’s business strategy and organization, the company’s risk factors, legal proceedings and financial data. It also includes the business conduct policy of Apple: ‘Apple conducts business ethically, honestly and in full compliance with all laws and regulations. This applies to every business decision in every area of the company worldwide’. Furthermore, the business conducts deals with corporate governance, information disclosure, non- corruption and bribery, environmental health and safety. Apple has considered the GRI G3.1 indices relating to the economy, the environment, human rights, society and labor for its publication on Governance, Product Environmental Reports, Recycling and Facilities Environmental Report and Supplier Responsibility. For Supplier Responsibility, Apple, for example, has taken into account the indicator which reports on measures it has taken to contribute to the elimination of child labor. With regard to Product Environmental Reports, Apple has used the EN26 performance indicator, and sets out initiatives to lessen the environmental impact of its products. Apple designs its products with the aim of being as energy efficient as possible, and it is the only company that can claim all electronic goods are Energy Star qualified. Apple’s products have become more powerful while, at the same time, fewer materials are used and fewer carbon emissions are generated. Almost all of Apple’s products are outsourced for manufacturing overseas. On its Supplier Responsibility website Apple states: ‘Apple is committed to the highest standards of social responsibility across our worldwide supply chain. We insist that all of our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes. Our actions – from thorough site audits to industry-leading training programs – demonstrate this commitment’. The Supplier Code of Conduct (Supplier Code) outlines Apple’s expectations for the suppliers it does business with. As a condition for doing business with Apple, suppliers have to commit to the Supplier Code. For the Supplier Code, Apple has adopted the Electronics Industry Code of Conduct (EICC), the guidelines and standards for the electronics sector. Through onsite audits Apple ensures that suppliers comply with the Supplier Code. The final assembly manufactures are audited every year and the components suppliers are audited arbitrarily. Apple obliges its suppliers to respect the human rights of its workers, to inform the workers of their rights, and to treat them with dignity and respect. Apple requires from its suppliers that they

prevent discrimination, involuntary and underage labor, excessive working hours and that they pay workers with wages and benefits in accordance with the applicable laws and regulations.

Apple’s conflicts

The limited transparency of Apple’s supplier sustainability policy has often been criticized in the media. In February 2010 Apple also turned down two shareholders’ sustainability proposals to establish a sustainability report on Apple’s environmental policies and the impact that climate change has on the company. The other proposal was to establish a board of directors’ sustainability committee.

Labour and human rights

A well-known conflict involving Apple’s suppliers is the suicides at Foxconn.122 It is the largest contracted electronics manufacturer in the world, with dealings involving Dell and Sony. Foxconn is the manufacturer of iPhones and iPads and employs over 900,000 workers, of whom 420,000 employees work at the Foxconn Shenzhen plant. This plant covers 15 factories, including dormitories, a hospital, a bank, a grocery store and restaurants. The workers live and work inside the complex. In 2006 the Chinese local press reported on the excessively long working hours and the discrimination of mainland Chinese workers by Taiwanese superiors. In May 2010 several media sources reported several cases of suicide at Foxconn.124 From 2009 to 2010 a total of 13 workers had committed suicide. The first worker, Sun Danyong, committed suicide after he had been interrogated on the loss of an iPhone 4 prototype that he had in his possession.125 When the former CEO Steve Jobs was asked about the suicides at Foxconn, he responded: ‘Foxconn is not a sweatshop. During an undercover investigation it was discovered that the reason for the multiple suicides was related to internal management.127 ‘The facilities of Foxconn are fine, but the management is poor,’ revealed Zhu Guangbing, who organized the investigation. According to Audrey Tsui, a professor at the National University of Singapore Business School, Foxconn maintains a military-style management approach. The workers were not allowed to interact with each other. Workers who violated the rule were penalized with a fine or were held to be in contempt by the manager. The weekly working hours of workers were up to 70 hours, ten hours above the maximum hours set by Apple’s Supplier Code. The Foxconn factory has good facilities. The workers have access to swimming pools and tennis courts. Foxconn organises activities such as chess clubs, mountain climbing or fishing expeditions. But with a 70-hour workweek, employees did not have any time to enjoy these facilities. However, interviews with several Foxconn workers by Dreamworks China revealed that not all the employees were dissatisfied. Some believed that the working conditions at smaller factories are worse. One of Foxconn’s workers stated that employees at Foxconn thought the media had exaggerated the suicides regarding their connection to Foxconn and that possibly some suicides had a sentimental or romantic cause. In February 2011, the media reported the child labor issues had worsened at the suppliers for computers, iPods and iPhones. Apple’s Supplier Responsibility Report 2011 revealed 91 underage workers at the suppliers.

Workers’ health and safety

Concerning workers’ health and safety conditions at the suppliers, in May 2010 two workers were killed and sixteen employees were injured during an explosion at Foxconn. An Apple spokesperson stated: ‘We are deeply saddened by the tragedy at Foxconn’s plant in Chengdu, and our hearts go out to the victims and their families. We are working closely with Foxconn to understand what caused this terrible event’. In the same month, The Guardian reported that workers from Wintek had been poisoned by n-hexane, a

Case Study: Apple, Lecture notes of Business

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Case Study: Apple