The Other Side of Apple (and not the one you're gonna like..)

This is the title of a report released yesterday by the Institute of Environmental and Public Affairs (IPE), an independent Beijing-based non-profit organization. In the report, Apple is accused of "ignoring hazardous and unhealthy conditions at the factories in China where its components are assembled."

The report is not just about Apple. It outlines findings from a group of 36 non-governmental organizations into environmental and health practices among technology companies that are operating in China. Out of the 29 global technology companies that were ranked, Apple was ranked last.

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.

This was a bit of a surprise for the authors. “We originally thought that Apple, as a corporate citizen, would take a leadership role, but now we feel they ended up as the most obstructive,” Ma Jun, director of the Institute of Environmental and Public Affairs said in a phone interview to the San Francisco Chronicle.

Examples? Here's one: "among the examples cited in the report is Wintek Corp. which in 2009 is alleged to have used poisonous chemicals in the production of screens for Apple [touch screens for the iPhone and iPad] that resulted in workers being hospitalized for nerve damage. In a regulatory filing in May, Wintek said it stopped using the chemical, N-Hexane, and all workers were getting adequate treatment. Apple has not acknowledged Wintek as a supplier, Ma said."

And what does Apple say in response? “Apple has had an extensive supplier auditing program since 2006 and we have lots of information available through our website,” said Jill Tan, a Hong Kong-based spokeswoman for Apple.

The issues Apple has with its suppliers as well as its limited willingness at best to address them are not new to those who followed the wave of worker suicides last year at Foxconn, Apple's primary China supplier, last year. Again and again we see that although Apple seems to be generally transparent and progressive in their approach to social responsibility (see Apple's Supplier Responsibility Report), they are not willing to answer tough questions and be fully transparent when it comes to criticism on their operations.

My guestimation is that it is connected to Apple's (and Steve Job's) general lack of willingness to acknowledge that they might do something that is not perfect or god forbidden wrong, no matter what the issue is. This sort of hubris is definitely not the culture you would expect from an innovative and creative company like Apple.

And if you think Apple should be excused because all the companies behave this way - think again. BT and HP, for example, ranked highly in IPE’s list of technology companies because they have responded to environmental problems and worked with suppliers to ensure better compliance, according to Ma.

You can learn more about the report from this video published by IPE:



More articles on this issue:

Is the iPad manufactured at a modern sweatshop?
Can the iPad be "green" if it is manufactured in a sweatshop?

Yours,
Raz @ Eco-Libris

Eco-Libris: Promoting Sustainable Reading!

Is the iPad manufactured at a modern sweatshop?

It depends who you're asking and what's your definition of modern sweatshop. last Monday I heard Frederik Balfour, who wrote a lengthy story about Foxconn for Bloomberg Business Week earlier this year, on NPR. He was talking with Melissa Block on 'All Things Considered'.

Block asked him "When you were at the Foxconn plant, you spoke with about two dozen workers, what did they tell you about conditions there? And did it seem to you like they were working essentially in a sweatshop?"

And Balfour replied:

"No. I've visited plenty of sweatshops around the world, from Central America to Vietnam. This is definitely not a sweatshop.

The thing is, though, that these workers are probably under more pressure than anyone else working in China. The supervisors are extremely draconian. There's no margin for error. The sophistication of the process and the products that they're producing means that they're always under the gun. And that, I think, is what contributes to the high stress level at Foxconn."

According to Wikipedia, a sweatshop is (sweat factory) is "a working environment considered to be unacceptably difficult or dangerous — especially by developed countries with high standards of living. However sweatshops may exist in any country. Sweatshop workers often work long hours for unusually low pay, regardless of laws mandating overtime pay or a minimum wage. Child labour laws may be violated. Sweatshops may have hazardous materials and situations. Employees may be subject to employer abuse without an easy way to protect themselves."

So even though Foxconn's employees are paid decent wages in Chinese terms and work in clean and shiny modern building and you won't there child labour, there are still some disturbing similarities between the conditions of work at Foxconn according to Balfour (a plant where the supervisors are extremely draconian, there's no margin for error and workers are always the gun) and Wikipedia's description of sweatshop.

Balfour explains in his article for Bloomberg Business Week that Apple knows about the conditions of work at Foxconn, but has its own reasons not to cut the ties with Foxconn, even though it violates Apple's code of conduct:In his article for Bloomberg Business Week.

"The incident prompted Apple executives to dispatch an audit team to investigate conditions at the Longhua plant. The report, still available on Apple's company website, uncovered several violations of Apple's code of conduct, including excessive overtime, an overly complicated wage structure, and unacceptable living conditions such as triple-decker bunk beds. Foxconn made changes that included an overhaul of its overtime practices.

Although Apple pressured Foxconn, Steve Jobs wasn't about to sever ties with Hon Hai, not with preparations under way for the production of Apple's next big product, the iPhone, which came out the following year. "Steve Jobs' achievements wouldn't be possible without Terry," says Chang Tien-wen, author of the 2005 book The Tiger and The Fox: Terry Gou's Global Competitive Strategy."

Apparently the violation of Apple's code of conduct doesn't stop Apple from continuing its working relationship with Foxconn and only two weeks ago AppleInsider reported that 'Foxconn rumored to ship next-gen iPad in 100 days for April launch'.

The bottom line is that no matter how you define Foxconn, I think the employees there deserve better conditions. It is not a big secret that it's all about the pricing of the product and Foxconn ability to provide it in minimum cost to Apple. Probably manufacturing it elsewhere (or even at Foxconn) in better working conditions will translate to higher costs. Still, doesn't seem right that Apple's financial results should come on the expense of the rights of employees for decent conditions, even if they are in China and even if they work for a powerful company such as Foxconn.

If Apple wants us to take seriously what it describes as its commitment to "the highest standards of social responsibility throughout our supply base" ("Apple is committed to ensuring the highest standards of social responsibility wherever our products are made. We insist that our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes."), something has to change.

What will make this change happren? I have a little faith in Apple's own will to do something about it, but I have more faith in Apple's stakeholders and I hope that a continuous demand of especially of customers will eventually get Apple to do the right thing and make the iPad not just a cool device, but also a one that is manufactured responsibly.

More articles on this issue:

Can the iPad be "green" if it is manufactured in a sweatshop?

Yours,
Raz @ Eco-Libris

Eco-Libris: Promoting Sustainable Reading!

Getting to Scale: Growing Your Business Without Selling Out – An Interview with Jill Bamburg

Getting to Scale is the second book so far that Swedish publisher Bookhouse Publishing translated and balanced out with tree plantings by Eco-Libris. They are doing great work over there and we encourage all our Swedish speaking readers to check them out.

How to structure your green or mission-driven business, so that you can grow and even possibly sell it one day, without compromising your ideals, beliefs and mission? How to fund your growth without finding out too late that your new investors are not at all interested in what you are doing for the environment or society, but only at the financial bottom line? While Getting to Scale is not a “how to” guide, it describes a wide variety of case studies that illustrates key findings. It is based on extensive in-depth interviewes with dozens of CEOs and founders of mission driven businesses such Ben & Jerry's Stonypoint, American Apparel, and many others.

As a co-founder of Eco-Libris, and someone who spends a sizable proportion of his day involved in the operation of a mission driven green business, I found this book useful and right on. Although it deals with “rich” problems, which I can only dream about having, it did give me food for thought, and also validated some of the things already in place. Will it help us get the millionth tree planted? Time will tell...

However I was thrilled to be able to present author Jill Bamburg, who is also the dean of the MBA program at the Bainbridge Graduate Institute, with questions on this fascinating topic.

Q: “Getting to Scale” was published in 2006, while 2007 was the year that, at least according to some parts of the media, brought the environmental movement to the folds of the mainstream, even if only temporarily (crossing fingers). Do you think there was any fundamental shift in the world of mission driven businesses since the book came out?

A: Great question. There has definitely been a huge upsurge of interest in green business, sustainability, and climate change since the book was published. As you say, these issues have definitely gone “mainstream” – which is to say that they have now been taken up by major corporations around the globe (or at least their PR departments!).

These businesses are now embracing the “business case” for undertaking environmental actions: cost savings, risk management, and revenue opportunities.

At the same time, there is also increased interest in the kinds of businesses I was writing about – that is, those that are fundamentally mission-driven, as opposed to profit-driven – on the part of two important demographic groups: young people who are just beginning their careers in business and mid-career or retiring baby boomers who are looking for ways align their work with their values.

So yes, I do think there has been a shift in the business world since the book came out.

Q: Your book is about the issues mission driven businesses have to deal with when they need to grow, sustain growth and/or sell their business, and you give many examples. Since then there were several high profile business deals that I assume would have made it into the book had they been done previously. For example the sale of Burt's Bees to Clorox, Coca Cola's investment in Recyclebank and JP Morgan acquisition Climate Care, the UK based carbon offset company. Do these recent cases validate your past conclusions, or did things change?

A: Another good question. In this case, I don’t think things have changed much -- with one exception, which I’ll talk about in a minute.

The reason I wrote the book initially was that I observed a disturbing pattern in the sale of socially responsible businesses to larger financially driven firms. I was concerned that there might be something inherently wrong with the model of socially responsible businesses that was causing these sales to happen. I set out to find out whether that was true by looking at socially responsible businesses that had grown successfully without selling out to larger players.

The most recent wave of sales is simply a continuation of what I observed in the earlier period. The one exception is that the mainstream market for “green,” organic and “alternative” products has grown, making these more attractive acquisition targets for mainstream players.

Q: Another relatively new development that we begin to see with such businesses discussed are mergers, such as the case of Zipcar and Flexcar. Do you see it as growth or more of a survival mechanism? How do mergers fit the models you present in the book?

A: I think that the Flexcar-Zipcar merger, and others like it, are both growth and survival strategies stemming from very traditional business imperatives. Both car-sharing companies needed capital to grow and expand their market coverage. Rather than seek to stay independent and fight head-to-head in the marketplace, or be acquired by larger, better capitalized firms in other businesses, they chose to join forces and develop the US market for car-sharing.

Many other businesses that seek to grow (or survive) don’t have the luxury of a merger with another like-minded company. The circumstances have to be right and the size of the final entity has to be large enough to meet the challenges of distribution and competition.

Q: These days it seems that there are more and more “green business” networking events, forums and circles. Although these places are a great place for mission driven businesses to interact and support one another, one can't help but also feel a certain buzz that sometimes looks like entrepreneurs creating green businesses with the idea of being bought out by a mainstream brand like Clorox as a goal in mind. Is your book also suitable for such entrepreneurs?

A: I think that some of the ideas in my book will apply to people who are building businesses to sell, but they are not my target audience. I wanted to help the business owners who are trying to remain independent and in control of the values of their companies.

Q: Is it now more easy or more difficult for a mission driven business, compared to the previous periods?

A: There are a couple of things that may make it a little easier than it has been in the past: 1) a shift in the mainstream market interest toward greener, healthier products and lifestyles; 2) an increase in the talent available to make these businesses successful; and 3) some new thinking in the area of hybrid corporate forms that may better support mission-driven businesses.

On the other hand, the fundamentals of business have not gotten any easier. It’s hard to build a successful business of any sort – and it’s harder still to build one that is as committed to environmental and social values as it is to financial success.

Q: Many of our readers are involved in the book industry, either as authors, booksellers or in publishing. Do you have any insight into the book business from a green or mission driven perspective? Any advice on how to navigate the market?

A: Just some great examples from the North American marketplace: Berrett-Koehler (my publisher), New Society Publishers on Gabriola Island, British Columbia, Chelsea Green in Vermont, and Raincoast Books in Vancouver, British Columbia (my Canadian distributor).

Once again, it’s hard to be successful in business. It’s even harder to be successful in the book business. And harder still to be successful in the mission-driven book business. All the companies I’ve mentioned have great lists, great values, and inspiring stories.

Q: What has been the feedback for the book so far from the business community or from Bainbridge students and graduates?

I’ve gotten good feedback on the book from a lot of people who have read it. They find the stories inspiring and the insights useful. No millionaires to report yet, however.

The same is true at the Bainbridge Graduate Institute, where I serve as Dean of the MBA Program. Our program is providing adult students with an MBA in Sustainable Business that will give them a leg up on aligning their work with their values. We’re six years into the venture. Still no millionaires, but a lot of successful change agents in business.

Title: Getting to Scale: Growing Your Business Without Selling Out

Link: http://www.bkconnection.com/ProdDetails.asp?ID=9781576754160

Author: Jill Bamburg

Swedish Publisher: Bookhouse Publishing

American Publisher: Berrett-Koehler Publishers

Publication Date: August 1, 2006

Pages: 174 pages

Yours,
Eylon @ Eco-Libris

Eco-Libris: plant a tree for every book you read!