4-4-2012By Meg Roggensack
Business and Human Rights
Last week’s Fair Labor Association (FLA) report on Apple’s Chinese supplier Foxconn should be a wakeup call to all companies that use global supply chains. The problems identified at Apple’s Foxconn facilities are not unique: these are challenges that face all companies doing business around the world. Having a code of conduct as well as an internal audit program are important, but they aren’t sufficient to ensure sustainable solutions to labor, environmental, and health and safety problems. Here are some key takeaways from the report:
- To ensure respect for worker rights, there is no substitute for an independent, external review of company efforts. Apple had been auditing its factories for years, and was aware of serious and ongoing problems at Foxconn. But its efforts to remedy persistent labor, health and safety and environmental concerns fell short, in part because, as the FLA’s review discovered, workers had been coached to avoid discovery of certain violations. More importantly, Apple’s review failed to discover one of the most fundamental truths about the management-employer relationship: Apple had concluded from its own reviews that there was an effective system in place for worker representation, however, worker representatives were chosen by management, and workers had little understanding of these committees or their significance for employer-worker relations.
- Audits only get you so far. For several years, Apple has been conducting regular audits, looking at factory compliance with its own code of conduct. The FLA’s review was a “top down, bottom up” investigation of all aspects of factory conditions. Using a sustainable compliance model, the FLA focused on the employment life cycle, from hiring to departure or dismissal. It analyzed the worker-management relationship at every point in that cycle. This assessment yielded insights about the root causes of the serious worker rights abuses at Foxconn: excessive overtime and consecutive days worked; wage levels and benefit discrepancies; unsafe working conditions and the impact on workers’ well-being and attitudes; and the lack of worker engagement and involvement in decisions affecting working conditions. As the FLA has learned through years of audits, unless root causes are identified and addressed, improvements in working conditions are superficial and temporary at best.
- In order to drive factory improvement, companies need to set the tone at the top and stay engaged. Foxconn was aware that it was not complying with the code of conduct, and yet it had a mixed record of improvement. CEO Tim Cook has become the face of the Apple’s efforts to turn a new page. He has tried to show that the company takes these violations seriously and will take additional steps to address them. As Apple’s own audits identified, excessive overtime has been a persistent problem. To address this, Apple this year began mandating weekly tracking of over 100 priority factories, including Foxconn, and this effort seems to be showing improvement. But much more will be required going forward. Apple needs to ensure that top management remains fully engaged to ensure that last week’s remediation plan is thoroughly understood, implemented, course corrected as necessary, and that its results are registered and publicly reported. This implies a dedicated Apple team, a review and revision of contractual provisions regarding supplier code compliance, support for factory capacity building to address these concerns, and ongoing collaboration with the FLA.
- Headquarters needs to take a hard look at how its own management practices affect factory floor conditions. Every time Apple changes a product specification or asks for short delivery timeframes, factory management must adjust operations. This means that they demand more of their workers in ways that run counter to code commitments. Foxconn is looking at its own operations to identify ways it can address production cycle demands to better ensure respect for worker rights – beginning by hiring additional workers and adding shifts. Apple needs to undertake its own analysis of its policies and practices, and use the findings to make necessary changes to these policies and practices that reinforce and support the reforms at its supplier factories.
- Apple can’t go it alone. In joining the FLA, Apple acknowledged the value of a multi-stakeholder approach, in which brands join with customers and civil society to address labor, health and safety, and environmental impacts of global factory operations, in the absence of national laws or their enforcement. Apple needs to press other brands using the same factories to follow its example. Hewlett, Dell, Amazon, Microsoft and others should all align their policies and oversight to ensure that Foxconn and their other suppliers are given a clear and consistent message about what’s expected, how the brands will be engaged to drive, how quickly improvements must be made, and how results will be measured and publicly reported.
American consumers now know that almost every product was made under conditions we wouldn’t accept here at home. Brands need to redouble efforts to ensure that the products they offer consumers are made sustainably. They need to tell consumers about the challenges they face, and show consumers what they are doing to address those challenges. In partnership with the FLA, Apple is now working toward improvements that have the potential to rewrite the rules for ethical sourcing and sustainability. All brands should take a page from this playbook.