Apple Expands Stakeholder Engagement to Chinese Environmental Groups

Is it possible that a memo is going around among CEOs instructing them to engage more seriously with stakeholders in general and NGOs specifically? Just look at the list – Adidas, Nike, Puma and H&M have all made commitments to eliminate all toxic pollution throughout their supply chain following the Greenpeace Detox campaign. The Rainforest Action Network reported yesterday that Disney executives finally agreed to meet with them and they’re working now together on a comprehensive paper policy, and now it’s Apple's turn. Yes, even Apple, a company that is not well-known for listening to NGOs, held talks last month with Chinese environmental groups after these groups accused some of the company’s suppliers in China of various environmental violations.

The Chinese organizations published two reports entitled “The Other Side of Apple,” focusing on pollution and poisoning problems in Apple’s supply chain in China. The first report, published on January 2011, accused Apple of "ignoring hazardous and unhealthy conditions at the factories in China where its components are assembled." Apple was not the only company the report cited as failing to act or respond to environmental and social concerns - Nokia, LG, SingTel, Sony, and Ericsson also fared poorly in the survey. But the groups said Apple was the worst, for "dodging" questions from the public and requests from environmental groups for investigations.

What was Apple’s response to the report? “Apple has had an extensive supplier auditing program since 2006 and we have lots of information available through our website,” Jill Tan, a Hong Kong-based spokeswoman for Apple told Bloomberg. Following the report, Apple restated its pledge to provide safe working conditions among its suppliers

On the second report, which was published on August, the authors wrote that “to this day, Apple has systematically failed to respond to all queries regarding their supply chain environmental violations.” This response, or lack of response if you want, only got the organizations to be more persistent and they decided to dig deeper and carry out further investigations into the environmental problems in Apple’s supply chain. The result of these investigations was the second report, and you can read on its findings on Bill DiBenedetto’s article.

What was Apple’s response to the second report? At first, company spokeswoman Carolyn Wu said “Apple is committed to driving the highest standards of social responsibility throughout our supply base,” quoting from the company’s Supplier Responsibility Progress Report, where Apple provides an annual update on its efforts to ensure its suppliers meet its code of conduct.

This sort of response was definitely expected given Apple’s replies in the past, but less expected was an email sent from Apple’s supplier responsibility department, according to Macworld to the Institute of Public and Environmental Affairs (IPE), which together with other environment groups, such as Green Beagle, Envirofriends and the Green Stone Environmental Action Network, published these two reports.

In the email, Apple said the company was “focused on constantly improving” its suppliers and added it found discrepancies with the list of suppliers IPE alleges are possible manufacturers of Apple products that have polluted the environment. Then came a surprise - The e-mail was asking if IPE would be interested in holding a private conference call to discuss the specifics.

IPE responded positively and the two sides met already twice. As PCWorld reports, IPE called the initiation of talks a positive sign, given that it was the first time Apple had responded to the environmental groups' concerns about the company's suppliers. Apparently, the two sides agreed to establish a communication line between them and Wang Jing Jing, vice director for told PCWorld that "in the future, we will listen to what they have to say and we will see how they will move forward. Our goal is that they will really work to improve the supply chain management."

So what got Apple to change its mind and finally start engaging with IPE and the other groups? Maybe Apple understood there can be more reports like these two and that these reports present Apple in a potentially bad light, especially when the company claims to rigorously monitor the compliance of its suppliers to Apple’s code of conduct. Like many companies before them, Apple came to understand that stakeholder engagement can actually be very beneficial and can save the company a lot of trouble.

This is just the beginning of the engagement, so we’ll have to wait and see how seriously Apple takes it. I know it won’t be easy for Apple, a company that is very hush-hush about its suppliers, but in any case, it is already encouraging to see that they finally stopped quoting their reports and started to listen to others.

Image credit: marcelebrate, Flickr Creative Commons

Raz Godelnik is the co-founder and CEO of Eco-Libris, a green company working to green up the book industry in the digital age. He is also an adjunct professor in the University of Delaware’s Alfred Lerner College of Business and Economics.