Apple to track suppliers' sourcing of conflict minerals

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 hadverified that all of the smelters in its supply chain that make tantalum, a metal used in capacitors and resistors, are sourcing itin"conflict-free" zones whereextraction of the metal is not used to "finance or benefit armed groups that are associatedwith human rights violations."

Apple also committed to making similar efforts toethically source tin, gold and tungstenbut said that since it uses much less ofthese materials, it has less clout when it comes to pressuring suppliers. The company said it willpublicly 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 safeand fair working conditions,' Apple said in the report. "To heighten smelter accountability and help stakeholdersfollow our progress, we are releasing, for the first time, a list of the smelters andrefiners in our supply chain along with their verification status."

SEC requirestracking 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 theDodd-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 theDemocratic Republic of Congo (DRC) and adjoining countries. Every company mustfile a first report with the SEC by the end of May.

The suppliers list Apple published Thursday shows that59 of Apple's smelters are "compliant' with the protocols set out by the Conflict-FreeSourcing 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 tocommit to pulling out of conflict zones where valuable minerals are mined in often unethical, violent circumstances.

"Rather than avoiding minerals from theDRCandneighbouringcountries entirely, were supporting verified supply lines and economic development in the region," the company said.

Underage labour found

The 40-page report covers various labour and environmentalpractices and is the product of451 audits of supplier facilities conducted in 2013significantly more than the 298 audits Appleconducted in 2012.

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

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

On labour rights, the 2014 report says Appletracked 1.5 millionworkers 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 a60-hour work week, must get one day of rest every sevendays 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 theuseof migrant workers and forced labour, conducting 33 investigationsand 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 dischargingwastewater without treatment, three that releasedemissions 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 toidentify58 Chinese supplier sitesthat were violating environmental laws. It found a total of114 violations.

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

"We targeted suppliers that are manufacturing product parts known to consumelarger 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 chemicalsabove the allowed limit;dischargingprocesswastewaterwithout treatment intostorm drains, sewersor the surrounding environment; emitting hazardous airpollutants without treatment or above the limit; and disposing hazardous wasteat a non-regulated facility."