Under Pressure, Apple Agrees to an External Audit of its Supply Chain

If you needed more proof how a protest can make a difference, you got it this week. Two online petitions with 250,000 signatures and dozens of demonstrators in front of Apple stores pressured the company to announce that it asked the Fair Labor Association (FLA) to conduct special voluntary audits of Apple’s suppliers, including the Foxconn factories in China.

“The inspections now underway are unprecedented in the electronics industry, both in scale and scope, and we appreciate the FLA agreeing to take the unusual step of identifying the factories in their report,” said Tim Cook, Apple’s CEO. While Cook claimed that the reason Apple asked the FLA to undertake this audit is that Apple believes “workers everywhere have the right to a safe and fair work environment,” it is more likely that the real reason was the recent protest against Apple, which has also been unprecedented both in scale and scope.

This external audit is a big deal, especially when it comes from a company like Apple, known for its arrogance and lack of willingness to admit it might not do something as well as it thinks it does. After all, only last month Cook wrote in an email to Apple employees: "every year we inspect more factories, raising the bar for our partners and going deeper into the supply chain… We know of no one in our industry doing as much as we are, in as many places, touching as many people." Apparently, the protest made him understand that the bar he’s using to classify Apple as "best in class" is not high enough, at least not in terms of results. And if there’s something Apple understands, it is that although intentions are important, only the results count.

The protestors themselves were divided in their response to Apple’s announcement. Some of them, like Mark Shields, who launched the campaign on Change.org that has so far collected over 200,000 signatures, responded positively yet cautiously to the news. "As an Apple consumer, I'm relieved to hear that Tim Cook is taking this seriously and breaking ground in the industry with Fair Labor Association auditing. But Apple still needs to use some of their trademark creativity and problem-solving to create a worker protection plan for new products - especially the upcoming iPad3 - so that they're proactively taking care of their workers," Shields said.

Others were less satisfied with this move. Taren Stinebrickner-Kauffman, Executive Director of SumOfUs.org, which collected around 50,000 signatures on its own petition against Apple, said she was happy to see the pressure is getting to Apple, but was critical on Apple’s choice of the FLA as an auditor. “Instead of actually solving the problem, they’re trying to whitewash it. The FLA is a business-funded group with a long track record of serving as a corporate mouthpiece, not an effective advocate for workers. Apple consumers want real action to improve workers’ lives, not more spin. We’re not going to be satisfied until the workers who make our iPhones have safe and healthy working conditions,” she said.

In its announcement, Apple was trying to ensure Stinebrickner-Kauffman and others that the audit will be rigorous and not simply a rubber-stamp certification. Apple said that the FLA will interview thousands of employees about working and living conditions including health and safety, compensation, working hours and communication with management. The FLA’s team, the announcement added, will inspect manufacturing areas, dormitories and other facilities, and will conduct an extensive review of documents related to procedures at all stages of employment.

The audit has actually started already. Apple reported that a team of labor rights experts began the first inspections Monday morning at the facility in Shenzhen known as Foxconn City. Apple promised that the process won't take too long and the FLA’s findings and recommendations from the first assessments will be posted in early March on FLA’s website. More inspections will be conducted in other facilities later this spring, and when completed, the FLA’s assessment will cover facilities where more than 90 percent of Apple products are assembled.

From the way Apple acts, it's clear the company is acting under pressure. After all, only last month Apple announced it is joining the FLA and also published for the first time a list of its suppliers. The company thought these steps would be enough to make the protest go away, but the success of the online petitions to deliver over a quarter of a million signatures within a very short time, proved Apple was wrong. The company understood it had no choice but to take further action and show it’s ready to make bold steps in order to get rid of this negative vibe and revive the buzz about what really matters – what the iPad 3 will look like.

Whether Apple’s commitment to safe and fair working environment on its supply chain is sincere is yet to be seen. The good news is that the transparency train is out of the station and unlike the situation so far, where Apple disclosed information only to the level it felt comfortable with, now someone else is in charge of the data. Even if the FLA might not be the best auditor possible, it is still an external auditing body and therefore there’s a much better chance now that we’ll get an accurate picture of the situation in the factories. Apple, on the other hand is going to find out soon that transparency is not the end of the journey, but just the beginning.

[Image credit: SumOfUs]

Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.