Apple to track suppliers' sourcing of conflict minerals

Apple says it's conducting more audits of its suppliers to ensure they are complying with labour standards and sourcing materials ethically and has recently vetted the supply chain for at least one of main metals it uses to ensure the smelters it comes from are "conflict-free."

Supplier responsibility report promises more transparency, accountability

Some of the materials used to make Apple products like iPhones and Macbooks come from conflict-ridden areas such as the Democratic Republic of Congo, and their extraction often helps fund brutal wars. Apple has vowed in its recent Supplier Responsibility Progress Report to try to source some of its minerals, like tantalum, more ethically. (Robert Galbraith/Reuters)

Apple is conducting more audits of its suppliers to ensure they are complying with labour standards, producing materials ethically and minimizing their environmental impact, the tech giant said in its latest Supplier Responsibility Progress Report released Thursday.

The company said that as of last month, it had verified that all of the smelters in its supply chain that make tantalum, a metal used in capacitors and resistors, are sourcing it in "conflict-free" zones where extraction of the metal is not used to "finance or benefit armed groups that are associated with human rights violations."

Apple also committed to making similar efforts to ethically source tin, gold and tungsten but said that since it uses much less of these materials, it has less clout when it comes to pressuring suppliers. The company said it will publicly track its suppliers' progress to becoming "conflict-free" by publishing a list every quarter showing where they operate and whether they have verified the source of their minerals.

"The ethical sourcing of minerals is an important part of our mission to ensure safe and fair working conditions,' Apple said in the report. "To heighten smelter accountability and help stakeholders follow our progress, we are releasing, for the first time, a list of the smelters and refiners in our supply chain along with their verification status."

SEC requires tracking of conflict minerals

Apple's disclosure is not entirely its own initiative. Tantalum, tin, gold and tungsten are known as conflict minerals and under a provision of the Dodd-Frank Act adopted in the U.S. in 2012, companies registered with the Securities and Exchange Commission that use these materials must determine whether they originate in a conflict area, namely the Democratic Republic of Congo (DRC​) and adjoining countries. Every company must file a first report with the SEC by the end of May.

The suppliers list Apple published Thursday shows that 59 of Apple's smelters are "compliant' with the protocols set out by the Conflict-Free Sourcing Initiative, which most major technology companies have signed onto, and 23 are "participating" in the group's Conflict-Free Smelter Program.

Apple did not go so far as to commit to pulling out of conflict zones where valuable minerals are mined in often unethical, violent circumstances.

"Rather than avoiding minerals from the DRC and neighbouring countries entirely, we’re supporting verified supply lines and economic development in the region," the company said.

Underage labour found

The 40-page report covers various labour and environmental practices and is the product of 451 audits of supplier facilities conducted in 2013 — significantly more than the 298 audits Apple conducted in 2012.

Apple has been strongly criticized in the past for the disconnect between its self-promotion as a company with high standards of quality and design that "thinks differently" and the harsh labour conditions faced by workers at the factories that make Apple products. ItsFoxconn facilities in China were the subject of several high-profile reports by journalists exposing human rights abuses.

Boys pan for gold in the resource-rich Ituri region of eastern Democratic Republic of Congo. Gold, tungsten, tantalum and tin are widely used in the technology sector, but their extraction poses ethical issues as they are often mined in areas riven by war and corruption. (Finbarr O'Reilly/Reuters)

The company started doing audits in 2006 and has since conducted them on suppliers in 16 countries.

On labour rights, the 2014 report says Apple tracked 1.5 million workers in its supply chain and that 95 per cent of its suppliers are complying with standards that stipulate that workers can't work more than a 60-hour work week, must get one day of rest every seven days and can't be forced to work overtime

The company did identify some facilities that were using child workers who were younger than 15, the minimum working age stipulated in Apple's Supplier Code of Conduct.

"Eight facilities were found with underage labour, with a total of 11 active cases and 12 historical cases," Apple said.

The company focused some of its monitoring efforts on the use of migrant workers and forced labour, conducting 33 investigations and clamping down on suppliers who charge excessive recruiting fees. As a result of its investigations, Apple said, it ordered 14 suppliers to repay $3.9 million US in fees to foreign contract workers. 

Another $2.1 million was repaid to workers whose employers made illegal deductions or shortchanged them on wages, the company said.

Focus on water use, treatment

On the environmental front, the report identified 17 "core violations" of Apple's Supplier Code of Conduct — including 11 facilities that were discharging wastewater without treatment, three that released emissions without treatment and one that used of a banned chemical.

Much of Apple's environmental efforts in 2013 focused on reining in water pollution and consumption caused by its activities. The company said it used data on water pollution in China compiled by the Institute of Public and Environmental Affairs to identify 58 Chinese supplier sites that were violating environmental laws. It found a total of 114 violations.

Farmers dig ditches to lead water from a polluted stream into farm fields in China's Yunnan province. Apple said it found 11 of its suppliers' facilities were discharging wastewater without treatment. (Stringer/Reuters)

The company also launched a pilot program to track water use and wastewater treatment at 13 water-intensive sites that collectively consume more than 41 million cubic metres of water per year.

"We targeted suppliers that are manufacturing product parts known to consume larger amounts of water," the report said. "These included suppliers of printed circuit boards (PCBs), enclosures, cover glass, packaging, printing, and some electrical board suppliers."

The company said it implemented clearer guidelines last year on what is considered a environmental violation that Apple will not tolerate and what the sanctions for such violations would be.

"These include things like using prohibited or regulated chemicals above the allowed  limit; discharging process wastewater without treatment into storm drains, sewers or the surrounding environment; emitting hazardous air pollutants without treatment or above the limit; and disposing hazardous waste at a non-regulated facility."