Is Foxconn driving Apple toward greater transparency?

Is Foxconn driving Apple toward greater transparency?

The results of the Fair Labor Association's (FLA) investigation into Apple's supplier Foxconn Technology Group should come as little surprise to concerned observers, considering the attention given to a rash of suicides in 2010 at one of the plants owned by China's largest private employer.

Apple's response, however -- as well as its agreement to have FLA investigate workplace conditions at three of Foxconn's plants in China -- may well represent an evolution toward greater transparency at the computer giant since Tim Cook became CEO.

Following the deaths of at least 17 workers who leapt to their deaths from the roof of an onsite dormitory, members of the Interfaith Center on Corporate Responsibility (ICCR) issued an Investor Statement, calling on "global brands to disclose the nature and severity of many of the problems found at these facilities, and what they are doing to address them."

The statement also criticized the Electronics Industry Citizenship Coalition (EICC), saying that the industry organization "could be far more assertive and proactive in ensuring worker rights." FLA's CEO Auret van Heerden apparently agreed with the investors' criticism, telling Bloomberg Businessweek, "The electronics industry has lagged behind the apparel and footwear industry, which has been doing this for 15 years."

Apple has been a particular target of criticism by sustainable investors. A shareowner resolution filed in 2010 by As You Sow, calling on the company to issue a sustainability report, stated, "Dell, IBM, and Hewlett-Packard have taken leadership roles…through publication of comprehensive sustainability reports that address their company's impacts with regards to issues such as greenhouse gas emissions reduction, toxics, and supply chain working conditions. Apple, however, lags behind global industry peers on sustainability reporting."

Since then, Apple has begun issuing an annual sustainability report, and in 2011 began addressing workplace conditions in its supply chains. However, the company stated that in the event of violations, it would only "continue to collaborate with the supplier towards further improvement." Effective supply chain management can be particularly challenging for companies in the electronics sector, because the number of available suppliers is limited. Foxconn alone employs an estimated 800,000 workers and, in addition to Apple, partners with Microsoft, HP, and Sony as well.

In February of this year, Calvert Investments expressed its concern over working conditions in Apple's supply chain, stating, "Apple must take responsibility for conditions in its suppliers' factories; first and foremost to protect workers, but also to reassure its customers and investors that the company takes these allegations seriously and will take appropriate steps to investigate and remedy such abuses."

Notwithstanding its expression of concern, Calvert did find that Apple "has taken significant steps in recent months, and especially in recent weeks, towards full supply chain transparency and 'zero tolerance' for workplace abuses." One of those steps, Calvert said, was joining FLA.

In January, Apple joined FLA, a multi-stakeholder collaboration that audits suppliers to ensure that the terms of its Workplace Code of Conduct are being met. This week, FLA published its investigation of Foxconn, based on surveys of 35,000 workers at three of the company's plants. FLA documented at least 50 violations.

"The key finding is that they've been exceeding the overtime limits," van Heerden said. Not only did the average number of hours worked per week at Foxconn factories exceed the recommendations of FLA's code; the number exceeded Chinese labor law as well.

In response to the finding, the report states, "Foxconn has agreed to achieve full legal compliance regarding work hours by July 1, 2013, while protecting workers' pay." The commitment will require the reduction of overtime hours from 80 per month to 36. As a result of Foxconn's commitment, the report continued, "tens of thousands of extra workers will need to be recruited, trained and accommodated."

"That's a major commitment," van Heerden said. "If Apple and Foxconn can achieve that, they will have set a precedent for the electronics sector."

Additional violations were found in the areas of health and safety, worker representation and compensation. In each of the areas, Foxconn committed to taking remedial action.

In a statement, Apple said, "We appreciate the work the FLA has done to assess conditions at Foxconn and we fully support their recommendations. We share the FLA's goal of improving lives and raising the bar for manufacturing companies everywhere."

"The spotlight is now on the other buyers and brands," van Heerden said. "Are they going to follow suit and be similarly candid?"

This article originally appeared at SocialFunds.com and is reprinted with permission.

Apple store photo by 1000 Words via Shutterstock.