Does Apple's great profit give them great responsibility?
In lieu of today's earning call, I thought it might be good to discuss what it means for a company, ultimately run by a relatively few human beings, to be in charge of such a fortune.
In the past decade or so, the concept of the tripple bottom line has arisen as a new way to think about doing business. This idea, is about trying to stop thinking of a company's success solely on the basis of the single bottom line of its economics, and start thinking about a company's success on the basis of the tripple bottom line of economy, ecology, and social equity. Clearly Apple is a company that is run off of the single bottom line; so when does a company become so profitable that we as consumers and users should start to demand they act on the tripple bottom line?
Apple has consistently been one of the least philanthropic companies in its class, and still has no official statement or goals on philanthropy. Not only does Apple have no policy or history of giving donations to charities, it also has no policy or history of giving Apple goods and services to charity. Late last year Apple enacted an employee match program for charitable donations, where Apple would match any donations that employees made to charities up to $10,000 per employee per year. I believe this is now the only charitable giving that Apple participates in at all. Compare that to the $840 Million in software and services Microsoft gave last year, and the $145 Million in cash that Google donated to charities last year.
Some examples of where I see Apple's failures in ecology and equity, and ways in which I would like to see them improve -
Having no plan is no excuse. Having no plan to eliminate the harmful practices you engage in, is having the plan to continue to be harmful.
- Official statement on CO2 emissions - "Apple remains committed to creating products that have the least amount of impact on the environment"
- Why not make an actual goal? Apple's ultimate goal should be to have 0 CO2 emissions. Even if there is no estimated date on when that should happen, that should be the ultimate goal.
- Obviously interim goals and dates would be good as well.
- Apple's only official goal on recycling is to remain at 70% recycled products (weight of products recycled compared to weight of products sold 7 years prior) through 2015.
- Apple's goal should be to have 100% of its products' materials recycled or biodegradable.
- Again, interim goals with time-tables would also be good.
- The only reference to packaging I could find was, "Even our product packaging uses recyclable materials wherever possible." A good start would actually be defining where you are - what percentage is recycled, recyclable, and biodegradable? Set a goal of getting 100% of packaging materials to be recyclable or biodegradable.
Social equity is an area I feel Apple should be working a lot harder in, since their business is so overwhelmingly based on physical products manufactured by tens, or hundreds of thousands of people. To me, this is the first area that Apple's great profits should be aimed. After all, whether a Chinese manufacturing plant is in the middle or not, Apple is providing 100% of the paycheck and work hours for thousands of workers, and Apple should take responsibility for the people it employs.
- Apple relies on local laws and regulations to set factory worker wages.
- By far my biggest problems with Apple's manufacturing partner policy. With $100 Billion in the bank, Apple should be paying the people it employs a wage they think gives them a good standard of living. Apple could drastically improve the lives of the thousands of people that are responsible for the products they sell, and have no change in its operations.
The 2012 Apple Supplier Responsibility Report that was just released contains some interesting details about Apple's supply chain, and its overal stance on social equity. However, as with most things, Apple is very broad in the report, never sighting any specific numbers about the areas it highlights as problems, instead just showing overall, vague percentages. For example, the report shows that only 38% of its supply partners are in compliance with Apple's 60 hour maximum work week; but, the report does not say how long workers are actually working in a week, or a single shift, or how many days without rest workers are getting. Additionally, the percentage itself is incredible vague, because it is the percentage of suppliers, not workers. If larger suppliers like Foxconn are in the non-compliance group, the percentage of workers in compliance with the 60 hour work week could actually be far less than 38%.
It is difficult to not go on too long about the various equity issues Apple has, but I will highlight a few more of the larger facts I saw reading the Report -
- Of all the "percentage of suppliers in compliance" categories that Apple lists, the highest percentage is 97%. One category that received this was prevention of underaged labor.
- While a great thing that this seems to be a small occurrence, underaged labor is not as large an issue as many think. There is not a shortage of labor pool in China, and the way workers are treated and payed are much larger problems.
- An interesting note: the only other two categories to score a 97% -
- Business Integrity
- Protection of Intellectual Property
- As noted before, only 38% of suppliers are in compliance with Apple's 60 hour work week.
- Additionally, Apple's code of conduct states that the 60 hour work week may be waived in "emergency or unusual situations." Other reporters have interviewed workers that say the weeks and months leading up to a product launch can lead to these increased hours, and if the product is popular, can persist for months after launch.
- 18% of facilities did not pay employees on time, or did not provide pay slips
- 30% of facilities did not provide adequate benefits as required by law
- 47% of facilities did not pay correct overtime pay as required by law
- 34% of facilities had at least one instance of equipment lacking sufficient safety measures
- 49% of facilities were not properly storing, moving, or handeling hazardous chemicals
- 30% of facilities were not disposing of hazardous chemicals correctly, as required by law
In addition to these results, I find it odd that Apple relies on an auditing system at all for its suppliers. Especially, in lieu of other reports from workers who have said companies know when audits are taking place, and make changes to what the auditor is going to see. With the amount of Apple products constantly being manufactured, why do they not simply have full time employees in the manufacturing facilities monitoring these areas?
Ultimately I do believe that Apple has crossed the point of profit where it becomes a responsibility to be environmentally and socially just. Where that point is exactly I am not sure, but I do think Apple is definitely looking at it in the rear view window.
Do others think that Apple's vast fortune puts it in a place of responsibility to do good with its earnings?
What types of improvements would you like to see Apple make?