Introduction
Corporate Social Responsibility (CSR) is seen as the business being part of society, and their effects on environmental issues and labour practises (Tariq Khan et al, 2012). Apple is the largest technology company who holds a 24.3% market share currently (Forbes, 2018), including over 50% on their smartphones by the end of their fourth quarter in 2017 (Investopedia, 2018). The company was founded in 1976 by Steve Jobs and Steve Wozniak and since, the brand has grown exponentially, with their market share in the phone industry alone increasing from 40% to 50% in just the last 7 years (Statista, 2018). The company employees over 123,000 workers (Statista, 2017) and thus as a global powerhouse, it must maintain a level of corporate social responsibility, specifically when industry contributes to 22% of greenhouse gas emissions worldwide (EPA, 2018).
This report is going to delve into Apple’s CSR, reviewing documents that Apple have made public in order to evaluate their levels of sustainability and what activities they partake in. The FTSE4Good ESG criteria is designed to measure performance within a company demonstrating strong environmental, social and governance ESG practises (FTSE Russell, 2018), with the report looking into how Apple combats issues surrounding climate change and thus the way it handles its environmental policies to correctly manage waste. Furthermore, the report will look into Apple’s ability to correctly manage labour and human rights.
Consequently, recommendations will be made that could help Apple address any issues that they don’t already identify in order to improve their sustainability and public image surrounding Corporate Social Responsibility.
Results
Apple’s CSR report 2018
Apple’s vision within their report is to completely eliminate their carbon footprint, ensuring people, the planet and profit are all correctly aligned. This is more commonly known as the Triple Bottom Line (Elkington, 1994). Apple display this in their report, outlining how their new extensive reliability testing simulates a customer’s experience [people] whilst maintaining recycled materials in product packaging [planet] therefore allowing them to strengthen their financial results (Apple Progress Report, 2018), displayed through an 11-billion-dollar increase in revenue in 2018 from 2017 [profit] (Statista, 2018).
Apple make it clear that CSR has been on their radar for a long time, with their first available report being in 2008. Apple have clearly understood the importance of lowering their carbon emissions, and as shown in Fig.1, it is decreasing yearly. This is more than likely due to consumers being more aware of sustainability and CSR (Clegg et al, 2011). Investors have also latched onto this and therefore use a discipline which considers the ESG criteria in order to generate long-term financial returns whilst maintaining a positive social impact. Apple know this, and have therefore began negative screening their suppliers, no longer using suppliers that don’t follow human right rules (Bloomberg, 2018) in order to create value for stakeholders as well as shareholders, the task being to align interests as a company with their stakeholders to create value (Freeman, 2008). 23 of Apples’ partners have committed to 100% renewable energy for Apple production (Apple Progress Report, 2018) showing Apple go above and beyond the current expectations of the public eye, strengthening their brand. Not only this, Apple release their report on a yearly basis and can therefore be seen as reliable and an accurate reflection of the businesses’ current affairs.
Apple’s report is sectioned comprehensively, giving a public insight into each component of how Apple cover their CSR; Environmental Responsibility, Climate Change, Materials. Not only this, Apple have a section labelled Better Together, outlining how they’ve pushed or aided their partners in being more sustainable. It shows how Apple are committed with including sustainable practises in their procedures. Companies need to follow in Apple’s footsteps due to their extensive and in-depth CSR reports causing an increase in awareness and importance (Breeze, 2013).
Furthermore, Apple don’t discuss human and labour rights in regards to national and international standards (ISO Standards). They do briefly overview standards with climate change however the lack of information on rights could lead to a belief that Apple are attempting to hide something.
Apple’s code of conduct
Apple’s last Code of Conduct update was released in January 2018 putting in view the level of standards Apple must meet, linking to their CSR by covering environmental management standards, health & safety, ethics, workers’ rights and management commitment. The release date also displays Apple’s desire to maintain their level of conduct in the industry, ensuring any issues encountered previously are altered. The code of conduct, although similar to the CSR report in content, is a lot briefer and direct, more likely to be comprehended by their employees and partners rather than the general public. This is also displayed through the layout of the document, with little graphics to make the document enticing to read to be seen as professional as possible.
The code of conduct can be seen as somewhat of a success, particularly with how Apple update it yearly. This is displayed through the proportion of low performers in their supply chain scoring less than 59% falling to 1% in 2017 from 3% in 2016. Furthermore, high performing suppliers scoring above 90% rose to 59% in 2017 from 47% in 2016. (Reuters, 2018). Apple continuing to raise their standards of conduct is shown through the 44 core labour violations found in 2017 as opposed to the 22 core violations in 2016 (CNet, 2018).
Apple and environmental management
Climate Change
Climate chain is a huge concern in the 21st century, an issue so fixated upon, the government in the United Kingdom set up an act to reduce greenhouse gas emissions; the Climate Change Act 2008. It is one of the criteria within the FTSE4GOOD ESG ratings (FTSE, 2018), and because Apple are an international organisation, they must comply with all regulations around the world that are linked to the criteria. Apple demonstrate their desire to assist with the issues surrounding climate change, with an importance on their sustainability.
Sustainability is seen as causing little to no damage to the environment and thus can continue long-term with operations (Cambridge Dictionary, 2018). Apple try to be as sustainable as possible in various ways, such as the Better Together initiative (Apple, 2018). The initiative engages with the industry to improve sustainability by optimising resources, using safer materials and making significant investments into renewable energy. All Apple facilities worldwide including offices, stores and data centres are entirely powered by clean energy (Apple, 2018). By doing this, Apple are directly working with the European Commission on their goal of 20% reduction of greenhouse gas emissions by 2020 from 1990 levels, as well as 20% of EU energy being from renewable sources (European Commission, 2018). As shown in Fig.2, Apple’s carbon emissions in 2017 were 27.5 million metric tons, a 2-million-ton improvement from 2016.
The Paris Climate Agreement aims to strengthen the global response to climate change, through sustainable development (UN, 2015). After the United States withdrew from the agreement, Apple issued $1 billion green bond for environmental projects, totalling $2.5 billion worth of financing (Bloomberg, 2017). This level of investment not only demonstrates Apple’s desire to become a sustainable company, but a company to lead the combat in this international concern. This desire led to Greenpeace to place Apple as the greenest tech company in the world (BusinessInsider, 2017). Apple’s affiliations to sustainability do not end here however as they continue to work with the Advanced Energy Economy, RE100 and We Mean Business (Apple, 2018). Apple joining the Green Electricity Consumption Cooperative as a Board Member, supporting voluntary renewable energy certificates in China demonstrate Apple’s attempts to invest on a global scale.
Waste management
The United Kingdom’s aim is to move towards a zero waste strategy (Gov, 2015). In 2016, the manufacturing industry contributed 84 million tonnes of carbon dioxide (National Statistics, 2016), and thus, the need for Apple to be aware of their waste management is crucial. Apple can be seen to participate in a circular economy, having introduced Daisy, a robot built to dissemble iPhones and reclaim the materials (Apple, 2018) as well as using 99% recycled and sustainably sourced paper for its packaging (MacWorld, 2017). Circular economy is believed to aid economic growth by saving material costs whilst reducing pressure on the environment and impacts because of said pressure (Kalmykova & Rosado, 2018). Due to this ethical practice, Socially Responsible Investment would be encouraged due to Apple being included within positive screening. Another way in which Apple is contributing to waste management is through the new plastic economy, having reduced its iPhone 7 packaging’s plastic use by 84% (BusinessInsider, 2017). Studies found for every one job in landfill with 10,000 tonnes of waste, four jobs are created by resource recovery (The Guardian, 2018) showing through Apple’s mind-set of circular economy, they are being socially responsible, satisfying not only the people’s element of Elkington’s (1994) triple bottom line, but also the planet.
Apple and Human and labour rights
Labour and human rights are some key criteria in the FTSE4Good ESG criteria (FTSE, 2018). The declaration of human rights is a common standard for all people and nations, to universally protect human rights (United Nations, 2018). These rights have begun to become one of the biggest concerns for businesses due to the importance it has in creating value for stakeholders. In 2009, Human rights was ranked as the second highest concern in a Business for Social Responsibility Poll (BSR, 2009).
Due to Apple’s position in the market, it is clear that Apple would want to maintain a standard within its organisation, and who they are seen to do business with. Apple have begun talks to buy cobalt directly from miners, negative screening those who didn’t abide by labour laws. Apple states that it would be safer for both parties, guaranteeing protection of labour rights (Bloomberg, 2018). This claim shows Apples desire to be committed to the declaration of human rights. However, it is unsure whether Apple are currently actively participating in this, as they were previously seen to be supplied by mines within the Democratic Republic of Congo that were found to be dangerous or employ children (Bloomberg, 2018), demonstrating Apple’s lack of commitment to the declaration of human rights. Up to 70% of suppliers are said to be small illegal mines using children digging tin ore by hands therefore making it clear that Apple are not fully ethically responsible, as to be so, they’d abide by all regulations set out by the International Labour Organisation.
Furthermore, in an article from the BBC, it is shown that Apple are still taking advantage of workers in their Chinese factories, who commonly refer to their environment as iPhone city. In 1994, the Labour act was introduced, the first legally binding labour law in China which set standards in wages, working hours, child labour and many other categories. Due to Apple having workers in china, Apple needed to abide by the act, however were found to breach worker’s hours, dormitories and work meetings. Workers were shown to be in the factory making parts for up to 18 days in a row without a day off and therefore apple were hit by a boycott call due to consumers believing in ethical practises, more commonly known as ethical consumption (Crane & Matten, 2007). Apple declining to be interviewed demonstrated a sense of guilt, strengthened by incidents in 2010 at Foxconn, where 14 workers killed themselves (BBC, 2014). Due to this, it can be seen that Apple are not considering the people element of the triple bottom line as much as they need to be (Elkington, 1994).
Recommendations
Having looked at Apple’s CSR, with particular focuses onto their efforts against climate change and maintaining human and labour rights. Although it is clear Apple are attempting to improve its CSR every year, it’s evident Apple should consider some recommendations moving forward, to increase their levels of corporate social responsibility. Apple could use the Gapframe to identify their issues, improvements being needed in the following areas:
- Governance
- Planet
Firstly, Apple need to ensure they are taking care of workers whilst maintaining human and labour rights, not just in their organisation, but from suppliers too. Unlike Lush, a company whose buyers travel to the supplier to trace ingredients, and ensure workers are treated fairly (Lush, 2018), Apple are buying cobalt from mines who employ children, as well as allowing unfair working conditions in Chinese factories involving working hours and noxious hazards (Bloomberg, 2018). Apple need to ensure they are abiding by national laws in certain countries, having been cited by the China Labour watch for poor factory working conditions (AppleInsider, 2018). To combat this, Apple could put stricter policies in place to not only protect their staff, but also suppliers and third party workers making parts in other countries, much like they are attempting to set up direct trade with miners. Apple would be correct to follow competitors such as Microsoft who released a report directly focused on child labour claims and cobalt supplies (Microsoft Sustainability Report, 2018).
Secondly, Apple could drastically reduce their Scope 3 in the GHG protocol, in which their carbon emissions are 293,440 metric tonnes of Carbon Dioxide in 2017, an increase of over 90,000 since 2012 (Statista, 2018). Although it is clear Apple are trying to reduce their footprint, now using 100% renewable energy in all facilities worldwide, emissions relating to supply, travel and waste are still drastically high. Apple already offer a trade-in scheme, in which they give Apple vouchers in return, however, to improve this further, they could offer money incentives to customers. If Apple were more responsible with supply, the amount they’d have to spend on waste reduction and investing back into rejuvenating mangroves (Quartz, 2016) would decrease, and inevitably aid shareholder’s view on their environmental responsibility.
Finally, Apple don’t discuss international and national standards in their CSR report, directly linking back to issues previously mentioned in China. Not discussing this can reflect negatively on Apple as it makes it seem like they have something to hide, not abiding by rules. It could be argued that throughout Apple’s supply chain there are discrepancies against good CSR. However, through Apple regularly updating their Code of Conduct, similarly to how they re-release their CSR reports yearly, it shows Apple are correctly adjusting to the ever-changing environment surrounding their company.
These key issues if rectified would allow Apple to position themselves as leaders in CSR and improve their sustainability, proving the importance of the surrounding environment and society is important.
Conclusion
Corporate Social Responsibility is evident in aiding companies in gaining advantage over competitors, as well as drastically increasing shareholder value. Apple, who are already deemed as the greenest tech company in the world by Greenpeace, are clearly demonstrating efforts in satisfying all three elements of Elkington’s (1994) Triple Bottom Line meaning according to Tariq Khan et al (2012) they have good CSR. Apple are shown as making catastrophic changes that competitors sought after, like using 100% renewable energy in their facilities, shown through making themselves the top constituents in the FTSE4Good Developed Index (FTSE, 2018). However, Apple is still yet to become the perfect role model, with discrepancies in their CSR report, and inability to guarantee worker’s protection in factories worldwide, i.e. China. Overall, there is a clear sign that Apple are driving the industry forward in their search to become completely responsible as a company.