Apple Supplier Code of Conduct: Standards and Progress

Introduction

Apple Inc.'s Supplier Code of Conduct delineates the company's high standards for generating safer work settings, treating employees equitably, and making use of environmentally responsible practices. The company has made significant strides to form one of the most stringent codes of conduct within the industry, and more often than not requires practices that go above and beyond local rules and regulations. Apple's suppliers are obligated to comply with the Code of Conduct by meeting the strict requirements set out in Apple's Supplier Responsibility Standards (Apple Inc., 2017). This paper discusses the distinctive changes Apple has made to its Code of Conduct in recent years.

Accountability

Through audits, Apple builds the competencies of its suppliers using an established four-phase procedure to facilitate compliance with the Code of Conduct. The first phase is audit prioritization. Apple employs a risk-based method to select which suppliers to audit, taking into account factors such as business, social, environmental, and health and safety risks. Audits are then ranked on the basis of geography risk, product risk, and prior audit performance. Apple also examines concerns raised by external stakeholders, with every inquiry appraised based on urgency (Apple Inc., 2017).

The second phase is the onsite audit. Each audit is conducted by Apple with the assistance of local third-party specialists trained on the company's auditing standards. This encompasses interviewing personnel, assessing payroll documents, physically evaluating health and welfare conditions within the facilities, and scrutinizing internal and external environmental conditions. Apple also investigates core violations that are not tolerated under any circumstances, including the employment of underage workers, falsification of documents, and intimidation of employees. Between 2007 and 2015, annual Apple audits increased substantially from 39 to 640, covering more than 1.6 million workers. Approximately 140 first-time audits were conducted across Apple's supply chain spanning 25 countries. To date, Apple has terminated agreements with 20 suppliers due to core violations (Apple Inc., 2017).

The third phase is addressing issues. Suppliers found to be non-compliant are required to submit a Corrective Action Plan within 14 days of the audit, outlining how they will resolve the identified problems. Apple verification experts then work in tandem with suppliers, conducting checks at 30, 60, and 90 days to assess progress (Apple Inc., 2017).

The final phase is verifying improvement. After a 120-day period, third-party auditors conduct an official visit to confirm that all elements of the original Corrective Action Plan were executed in accordance with the company's standards. If this is not the case, a second verification audit is carried out within 30 days. By working collaboratively with its suppliers rather than simply controlling them, Apple Inc. has considerably improved their rate of compliance (Apple Inc., 2017).

Labor and Human Rights

Another key aspect of supplier responsibility encompasses labor and human rights. Apple does not permit bonded labor, which occurs when workers pay employment fees before receiving any salary. When such instances are discovered, suppliers are required to reimburse those fees to the affected employees. Over the past eight years, this policy has resulted in more than $25.6 million reimbursed to workers, with $4.7 million of that amount coming in fiscal year 2015 alone. To address this issue more broadly, Apple works with the International Organization for Migration (IOM) to deliver a program that educates workers on their rights and responsibilities, contract terms, reporting of illegal practices, and abuse (Apple Inc., 2017).

Apple also prohibits underage labor among its suppliers. If a supplier is found to have underage children working in its facilities, it is required to return them to their families, pay for their education at institutions selected by the family, and provide compensation for basic necessities until the child reaches the legal working age. For example, in 2015, three instances of underage labor were discovered and addressed accordingly (Apple Inc., 2017).

Excessive working hours represent a key concern throughout the manufacturing industry's supply chains. Within Apple's supply chain, working hours are restricted to 60 hours per week with a mandatory day of rest each week. The company also uses a work-hour tracking system and weekly reporting to enable real-time intervention. In 2015, Apple achieved a 5% improvement in supplier compliance, reaching 97%.

Apple is also committed to sourcing raw materials responsibly. The company strives to ensure that minerals used in its products do not fund armed conflict. Rather than withdrawing from affected regions, Apple believes it is more effective to work with suppliers to facilitate change. In December 2015, following five years of sustained effort, all identified smelters and refiners in Apple's supply chain for current products were participating in an independent third-party conflict minerals audit program. This included scrutiny of mineral supply chains in the Democratic Republic of Congo to verify due diligence. Apple also plans to report any situations linked to armed groups within its supply chain and to resolve them with the appropriate authorities (Apple Inc., 2017).

Conclusion

In recent years, Apple Inc. has made significant strides in improving its Supplier Code of Conduct. All suppliers within the company's supply chain are required to adhere to its standards. The Code of Conduct encompasses four key areas: accountability, labor and human rights, empowering workers, and environment, health and safety. Apple is broadly committed to ensuring that every individual within its supply chain is treated with dignity and respect. Accordingly, each year the company works to improve working conditions, provide educational opportunities, raise living standards, and uphold human rights (Moren, 2014).