Apple's Global Supply Chain: People and Planet Progress Report 2020, Study notes of Human Rights

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2020 Progress Report

Supplier Responsibility

“We know that how

you create is as

important as what

you create, so at

Apple, people are

at the heart of

everything we do

and every product

we make.”

Tim Cook

CEO

This year’s Supplier Responsibility Progress Report describes our work to bring all

of those commitments to life in 2019. Whether it’s helping with the transition to 100

per cent renewable energy, or training millions of people on their workplace rights, we

apply our values to all aspects of our business, and every year, we raise the bar that

our suppliers must meet as well.

We put people first in everything we do — and require everyone we work with to do

the same — because we want to uphold the highest standards. Our Supplier Code of

Conduct prevents discrimination and harassment of any kind, and supplier employees

are provided with anonymous channels to speak up. We partner with our suppliers to

create educational and training opportunities, including traditional university degree

programmes, vocational training initiatives, and health and wellness programmes so their

employees can learn new skills and work towards fulfilling their goals.

We’re committed to transparently reporting the progress we’ve made and have yet

to make. This report draws on interviews from more than 50,000 employees in our

supply chain and more than one thousand audits of supplier facilities across 49

countries — including surprise audits. The same attention to detail and innovation

that goes into our products informs this report, and the work to ensure our worldwide

network of suppliers upholds the standards themselves.

The environment we all share is fragile, and we are more dedicated than ever to

fighting climate change and reducing emissions. Through strategic partnerships,

we’re helping our suppliers shrink their carbon footprint and conserve precious

resources, like water and energy. Green manufacturing is smart manufacturing and,

more broadly, we know what is good for the environment is also good for business.

While COVID-19 has been an unprecedented challenge, we’ve also drawn hope and

inspiration from humanity’s renewed focus on the health of our colleagues, friends

and neighbours. That consciousness — of our health and the health of others — is

something we can always carry with us.

Our work to protect people and the planet may never be finished — but we’ve never

been more confident that our brightest days are still ahead.

Sabih Khan is Apple’s Senior Vice President of Operations.

Sabih leads Apple’s global supply chain, which includes

Supplier Responsibility.

$ 32.3 M

56

% 21

115.5B

4 M

52 K+

19.4M

No. 1

53

%

A

1 M+

education, skill building and enrichment course participants since 2008

supplier employees interviewed about their workplace experience

Second consecutive year receiving an A+ rating from the Safer Chemicals, Healthy Families “Mind The Store” campaign for our efforts to eliminate harmful chemicals from Apple products

tonnes of supply chain combined, annualised energy efficiency–related and direct process greenhouse gas emissions avoided, equivalent to taking 220,876 cars off the road for one year

recruitment fees paid back by suppliers to 36,599 of their employees since 2008, $1.3M repaid to 462 supply chain employees in 2019

1,

801 Apple-managed supplier assessments + 291 smelter and refiner third-party assessments

• 50 assessments in other areas of our services supply chain conducted in 49 countries

measured increase in nutrition knowledge by health programme participants in India

human rights and environmental organisations working to solve supply chain challenges that received support from Apple in 2019

supplier employees trained on their workplace rights since 2008

litres of freshwater conserved by suppliers to date, achieving a 40 per cent wastewater reuse rate. 35.2B litres were conserved in 2019, enough to provide drinking water to over 48 million people for one year.

13

%

increase in high-performing supplier facilities year on year

increase year on year in supplier sites committed to achieving zero waste — with 50 already certified

Apple awarded the first Corporate Information Transparency Index Master’s Level designation by China’s Institute of Public and Environmental Affairs (IPE)

100

%

participation in third-party audits across identified tin, tantalum, tungsten, gold and cobalt smelters and refiners

People

2019 Impact

Planet

Progress

Table of Contents

Introduction

People

Labour and human rights

Education initiatives

Health and safety

Responsible materials sourcing

Planet

Water stewardship

Zero waste

Clean energy

Green factories

Progress

Supplier selection and capability building

Leading and listening

Measurement

2019 assessment results

Additional resources

Aligning with the United Nations Guiding Principles

9

11

55

75

97

Quality assurance, iMac production, China

Setting and upholding

the highest standards

We have a deep commitment to ensuring that the people in our supply chain

are safe at work, that they are treated with dignity and respect, and that

throughout the process of building our products, our planet is protected.

In 2005, the Apple Supplier Code of Conduct and the Supplier Responsibility

Standards (“Code” and “Standards”, respectively) were developed based on

our work to safeguard working conditions at our manufacturing suppliers’

facilities and in alignment with international labour and human rights standards,

including those from the International Labour Organization (ILO) and

industry-leading health and safety standards. Our Standards supplement our

Code by providing additional clarity regarding Apple’s requirements. Apple

suppliers must meet these Standards to be in compliance with the Code.

Suppliers are assessed against the Code and Standards through rigorous

Apple-managed assessments and other third-party audit programmes.

In 2012, we extended our Code beyond manufacturing into the service

domain to include AppleCare contact centres, logistics and repair centres.

In 2014, we added requirements for the responsible sourcing of minerals.

In 2015, our Code began to be applied to Apple’s Retail supply chain, which

includes the suppliers that provide janitorial and other services to Apple

Stores worldwide. In 2018, we expanded the scope of our Responsible

Sourcing Standard to include all materials.

Fifteen years on from their initial development, we continue to update

our Code and Standards annually, raising the bar that our suppliers must

meet. We continue to raise our standards alongside evolving international

standards, such as the United Nations Guiding Principles on Business

and Human Rights and the Organisation for Economic Co-operation and

Development due diligence guidance on responsible minerals supply chains.

Our strict human rights and environmental protections set the foundation

for our work. Then we constantly evaluate our own efforts, listen to people

in our supply chain, and implement robust programmes that have a measurable

impact on protecting people and the planet.

Areas addressed by the Apple Supplier Code of Conduct

Labour and Human Rights Health and Safety Environment Ethics Management Systems

People

Creating an Apple product requires

considering not only the people who will

use it, but also those who help build it.

Labour and human rights

Education initiatives

Health and safety

Responsible materials sourcing

13 Apple Supplier Responsibility 2020 Progress Report People Planet Progress Measurement

People come first.

In everything we do.

People are at the centre of everything we do. Making sure people

in our supply chain are protected means considering a person’s

entire work experience, from getting the job, to getting started, to

their daily experience in the workplace. These protections apply

regardless of geographic location or the work being performed.

Strict labour and human rights protections set the foundation, but

we strive to go further for the people that our supply chain touches

by providing enriching educational opportunities that equip them

with tools to advance and prepare for the future.

Rear housing unit inspection, iPhone production, China

Prevention of Involuntary Labour

Suppliers must ensure that all work is voluntary. Withholding an employee’s government-issued identification and travel documents is strictly prohibited. Suppliers must ensure that contracts clearly convey the conditions of employment in a language understood by their employee. Suppliers shall not impose unreasonable restrictions on movement within the workplace or upon entering or exiting company-provided facilities. Supplier employees shall not be required to pay employers’ or their agents’ recruitment fees or other similar fees to obtain their employment.

Protected Class

Suppliers may only employ workers under the age of 18 if the employee is older than the applicable legal minimum working age and the supplier ensures they do not perform high-risk work, consistent with ILO Minimum Age Convention No. 138. In addition, suppliers cannot require employees under the age of 18 to work overtime or perform night work. Suppliers must ensure proper management of student workers through proper maintenance of student records, rigorous due diligence of educational partners, and protection of students’ rights in accordance with applicable law and Apple’s Code.

Wages, Benefits and Contracts

Suppliers must meet all legal requirements relating to wages and benefits, including paying accurate wages in a timely manner. In addition, the use of wage deductions as a form of disciplinary measure is prohibited. All use of temporary and outsourced labour shall be within the limits of the local law.

Working Hours

Suppliers must restrict working weeks to 60 hours, including overtime, and supplier employees must be provided at least one day of rest every seven days. Standard working weeks shall not exceed 48 hours. Suppliers are also required to follow all applicable laws and regulations with respect to working hours and days of rest. Additionally, all overtime work must be voluntary.

14 Apple Supplier Responsibility 2020 Progress Report People Planet Progress Measurement

Labour and human rights Code highlights

Every person has the right to a safe, healthy workplace where they are

treated with dignity and respect. The labour and human rights provisions

in our Code are designed to achieve just that, holding suppliers

accountable at every step.

19.4M

Supplier employees trained on their rights since 2008

52 K+

Supplier employees interviewed about their workplace experience as part of Apple-managed assessments

31 K+

Supplier employees contacted to ensure they did not experience retaliation as a result of participating in an Apple-managed supplier assessment

16 Apple Supplier Responsibility 2020 Progress Report People Planet Progress Measurement

Protection begins with

rights awareness

In order for a workplace to be safe, healthy and respectful, employees

must be aware of and able to exercise their rights. That’s why we

require all suppliers to train their employees on workplace rights.

Deeper in our supply chain, we work with partners to raise rights

awareness through our Responsible Sourcing programme.

Supplier employees attend a new employee orientation session

where they are trained on international labour standards, local labour

law, and the labour and human rights protections required by our

Code. Topics in the training include working hours and overtime

policies, grievance mechanisms and hotlines, our zero tolerance for

retaliation policy, and occupational health and safety standards.

Zero tolerance for retaliation

The ability of supplier employees to speak up without fear of

retaliation is fundamental to labour and human rights protections.

Our Code and Standards include non-retaliation protections and

feedback channels, including grievance mechanisms at supplier

sites. External third-party anonymous hotlines and the ability

to contact the Apple Supplier Responsibility team directly at any

time and in any language ensure that these requirements are

upheld. When an issue is raised, supplier management is required

to immediately investigate and to resolve the issue in a timely

manner. Retaliation in any form is a Core Violation of our

Code — the most serious level of Code violation — and carries

immediate commercial penalties.

We take reports of retaliation very seriously, investigating the

reports we receive. We proactively follow up with supplier employees

interviewed during assessments to confirm that they were not

subjected to retaliation as a result of being interviewed. Additional

procedures are put in place for higher-risk or vulnerable groups,

such as foreign contract workers. In 2019, Apple interviewed more

than 52,000 supplier employees as part of supplier assessments

and made over 31,000 follow-up calls to participating workers to

verify that they did not experience retaliation as a result of being

interviewed during the assessment.

42 K+

Supplier employees participated in workplace satisfaction surveys

17 Apple Supplier Responsibility 2020 Progress Report People Planet Progress Measurement

Listening and learning

Direct feedback from supplier employees helps us to better

understand their experience so we can work with suppliers to

identify opportunities for improvement. In 2019, we partnered

with workplace rights experts to deploy mobile surveys that

measure supplier employees’ general satisfaction at work; the

extent to which they felt their workplace rights were respected;

management’s responsiveness to grievances; and their rating of

workplace amenities such as food service, facilities and living

conditions. The anonymous and voluntary surveys directly informed

improvements that increased employee satisfaction, supplier

performance and workforce retention. This information helps us

to understand employees’ experience in the workplace and better

assess suppliers’ performance in meeting our Code.

In 2019, more than 42,000 supply chain employees participated in

workplace satisfaction surveys, which resulted in actions taken to

increase employee satisfaction at supplier sites. These included

efforts such as enhancing content in new employee orientation,

improving food service operations and enhancements to employee

living quarters.

19 Apple Supplier Responsibility 2020 Progress Report People Planet Progress Measurement

Moving from remedy to prevention

To truly eradicate debt-bonded labour from our supply chain, we

have to stop it from happening in the first place, which requires

understanding and addressing root causes. This objective is the

primary goal of our Responsible Labour Recruitment programme.

In 2019, through our Responsible Labour Recruitment programme, we

continued mapping the higher-risk migration corridors for foreign

contract workers in our supply chain using our own data and information

from the International Labour Organization (ILO) and the US State

Department in order to more deeply understand challenges at the

source of labour recruitment. We also convened an expert group of

leading government policymakers, non-governmental organisations

and researchers to further strengthen our efforts. We also spoke

directly to migrant workers and labour agents in our supply chain to

better understand their experiences.

Prevention through engagement

We found that some suppliers and labour agents were not rigorously

carrying out supply chain due diligence at the labour recruitment level

and that, in some cases, people travelling for work did not receive

adequate training prior to departing their home country. To address

these gaps, we strengthened our partnership with the International

Organization for Migration (IOM), a United Nations agency and the

leading global expert on migration, and began to integrate labour agent

audits into our Responsible Labour Recruitment programme. Consulting

closely with stakeholders and the IOM, we created the Responsible

Recruitment Due Diligence Toolkit (“the Toolkit”).

The Toolkit offers suppliers and labour agents a comprehensive

how-to guide with practical tools covering six core areas: embedding

responsible recruitment into policies and management systems;

identifying and assessing risks; preventing and mitigating risks;

tracking implementation and results; communicating how risks are

addressed; and providing access to remediation. The tools are

designed to be simple to use and easy for suppliers to adopt. They

include a self-assessment checklist, worker training records, a fees

and expenses calculator, and a grievance and remediation tracker.

We began holding training sessions on the Toolkit in those countries

where the most prevalent migration corridors in our supply chain exist,

including Malaysia, Singapore and the Philippines. We focused our

20 Apple Supplier Responsibility 2020 Progress Report People Planet Progress Measurement

“Our partnership with Apple is focused

on creating innovative solutions to labour

recruitment challenges. The Responsible Recruitment Toolkit is a major step forward

in providing user-friendly tools to address the underlying causes that lead to debt-

bonded labour, especially for migrant workers

in complex global supply chains.”

Laura Thompson Deputy Director General, International Organization for Migration (IOM)

initial efforts on the Philippines-to-Taiwan corridor, a major migration

corridor in the electronics supply chain. We trained five of the key

labour agents in the Philippines, who represent a significant number

of workers seeking employment in Taiwan. We also strengthened our

pre-departure orientation (PDO) training for labour agencies and civil

society organisations that are certified by the government to carry

out PDO sessions across all industries.

The Toolkit aligns with internationally accepted standards and best

practices and is now being used widely in Apple’s supply chain. It is

also designed for broad, global adoption across industries, and is being

shared with other companies through the Responsible Business

Alliance (RBA), the world’s largest industry coalition dedicated

to corporate social responsibility in supply chains. It will also be

adapted for global use by the IOM.