Conducted 451 audits at all levels of our supply chain, a 51 per cent increase from 298 audits in 2012.
These audits covered facilities where nearly 1.5 million workers make Apple products.
Publicly released more than 100 pages of comprehensive requirements behind our Supplier Responsibility Standards, for the first time.
The depth and breadth of our supplier responsibility program is illustrated by how we monitor the many suppliers responsible for producing the camera module in iPhone 5s. From the manufacturer of the smallest parts to the final assembly facility, every supplier is accountable for upholding our Supplier Code of Conduct.
Historically, Apple has had one of the toughest Supplier Codes of Conduct in the electronics industry. Yet each year we raise the bar higher. These strict requirements communicate our expectations of how responsible global supply chains should operate.
For the first time, we’re publicly releasing our updated Supplier Responsibility Standards (PDF) — more than 100 pages of comprehensive requirements our suppliers must follow to do business with Apple. We’ve made our high-level Code of Conduct (PDF) available since 2005, but we thought it was important to give stakeholders full access to the details. Our standards show the specific requirements our suppliers must follow in 20 key areas under labour and human rights, health and safety, environment, management systems and ethics. We’ve also expanded our standards by including requirements for student workers, ergonomic breaks, boundary noise, dormitory space and occupancy, emergency preparedness, responsible sourcing of minerals, environmental topics and more.
In 2013, we rolled out the new Code and Standards to our suppliers and included guidance on how to implement these standards in their factories. The new Code and Standards became effective in January 2014, and all future audits will follow these guidelines. To make sure suppliers adhere to our Code, we have an aggressive compliance-monitoring program that includes Apple-led factory audits and corrective action plans, and requires confirmation that these plans have been carried out.
An Apple auditor leads every onsite audit, supported by local third-party auditors who are experts in their fields. Each third-party expert is trained to use Apple’s detailed auditing protocol. At each audited facility, the teams conduct physical inspections, interview workers and managers, and observe and grade suppliers based on more than 100 data points corresponding to each category of our Supplier Code of Conduct. We may also ask a supplier to immediately show us portions of a facility that are not scheduled for review. We use this data not only to ensure compliance and sustainable improvement over time, but also to consider new programs that will meet the changing needs of our suppliers and workers.
In addition to regularly scheduled audits, we conduct a number of surprise audits. In these audits, our team visits a supplier unannounced and insists on inspecting the facility within an hour of arrival. We conducted 31 surprise audits in 2013.
A supplier audit in action
Since our first audits in 2006, we’ve audited in more countries and more supplier categories. And we have expanded our audit coverage every year — far beyond our 18 final assembly facilities. We’ve now conducted audits in 16 countries, and in 2013, our 451 audits covered nearly 1.5 million workers. We audit our final assembly manufacturers every year, and we audit other facilities based on certain risk factors, including location and geographic sensitivities, past audit performance and the nature of the facility’s work. We also perform audits in selected nonproduction facilities, including call centres and warehouses. And we conduct specialised audits focusing on areas such as the environment and safety.
Some facilities that are deep in the supply chain have never been audited by Apple or other industry peers. So it is not uncommon that our audits give these companies their first opportunities to evaluate their factories against social and environmental standards. These efforts not only improve working conditions for these suppliers, but also help improve conditions industry-wide, since many of our peers use the same companies.
Apple considers core violations to be the most serious breaches of compliance. These include physical abuse; underage, debt-bonded or forced labour; falsification of information or obstruction of an audit; coaching workers for audits or retaliating against them if they provide information; bribery; significant pollution and environmental impacts; and issues posing immediate threat to workers’ lives or safety. All core violations must be stopped and corrected immediately. Our preference is to correct problems rather than just fire the supplier — which in the absence of other enforcement would allow these violations to continue. However, if a violation is particularly egregious or if we believe a supplier is not fully committed to stopping the behaviour, we terminate our relationship with that supplier and, when appropriate, report the behaviour to the authorities. And any supplier with a core violation is placed on probation until the next re-audit — typically in one year — and may not be considered for new business until the issue is fully remediated and the probation period ends.
Audit data isn’t just used for corrective actions after the fact. We’re also incorporating that information directly into our product introduction processes. In 2013, we piloted a program to analyse 138 suppliers that were being considered for our new products. We evaluated the suppliers’ activities regarding the environment, health and safety, and labour and human rights. We used this analysis when making decisions about sourcing.
This program also allows us to anticipate challenges and address them before they arise. Suppliers can prepare more effectively for upcoming product launches by doing things like obtaining proper permits, reviewing emergency preparedness plans, and updating their policies on work hours and student workers. In 2014 and beyond, we’ll integrate this program further into our business.