Technology is nothing. What's important is that you have a faith in people, that they're basically good and smart, and if you give them tools, they'll do wonderful things with them.
- Steve Jobs
All businesses have some sets of ethical practices they follow. However, many companies, especially multinational corporations, fail to do so and are accused of ethical issues. In this case study, we will examine the ethical practices and issues of Apple.
Introduction to Apple
Apple Inc. is an American multinational technology company that designs and manufactures personal computers, smartphones, tablet computers, computer peripherals, and computer software. It was founded by Steve Jobs, Steve Wozniak and Ronald Wayne in 1975 in Cupertino, California, United States.
The company's first product was Apple I, a personal computer hand-built by Steve Wozniak (see Figure 1 below). For its first 30 years, the company was called Apple Computer Inc. until in 2007 it dropped 'computer' to reflect its ongoing expansion into the consumer electronics market. Currently, Apple is the largest information technology company by revenue and the world's most valuable company. As of 2021, employing 154 thousand people, the company had over 500 stores worldwide, including 271 stores in the United States.
Fig. 1 - Apple I Computer
Ethical practices
We do the right thing, even when it's not easy.
- Tim Cook, Apple's Chief Executive Officer
Business conduct
Business conduct is a set of principles designed to guide workers to conduct themselves with honesty and integrity in all actions representing a company.
There are four main principles that guide Apple's business practices: honesty, respect, confidentiality and compliance.
The company requires its employees, suppliers, contractors, consultants and other business partners to follow these principles when providing goods and services to Apple or acting on its behalf. In doing so, they should demonstrate high ethical standards, and treat customers, partners, suppliers, employees, and others with respect and courtesy. Additionally, they should protect the company's and its stakeholders' confidential information and make sure that business decisions comply with applicable laws and regulations. The company also has a set of policies regarding workplace behaviors, protecting Apple, individual accountability and business integrity .
Corporate social responsibility
Corporate social responsibility is a set of practices businesses undertake in order to contribute to society in a positive way.
Companies may set environmental goals, follow ethical practices and internal governance, or set social objectives - these are all forms of CSR that are integrated into a businesses' operations and interactions with its stakeholders.
To learn more about CSR see our explanation about Corporate Social Responsibility.
There are also some practices Apple undertakes to commit to society in a positive way. Apple seems to be highly value people. The company provides learning opportunities and ensures that health and safety standards are kept. What is more, it takes care of the environment by reducing its carbon footprint. As it says on the company's website:
Apple is committed to the highest standards of social responsibility across our worldwide supply chain. We insist that all of our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes. Our actions - from thorough site audits to industry-leading training programs - demonstrate this commitment. " (apple.com)
Ethical issues
Despite its commitments, there seem to be several ethical issues with Apple (see Figure 2 below). These include poor working conditions such as health and safety risks, child labour, poor environmental reporting, contribution to e-waste and tax avoidance.
People
After an investigation at one of Apple's suppliers, the Fair Labor Association found
excessive overtime and problems with overtime compensation; several health and safety risks; and crucial communication gaps that have led to a widespread sense of unsafe working conditions among workers "
In one of The Guardian's articles from 2019, Apple was named a defendant in a lawsuit filed in Washington DC by human rights firm International Rights Advocates on behalf of 14 parents and children from the Democratic Republic of the Congo (DRC). These parents were seeking damages and compensation for the death or serious injury of their children who, as they claimed, were working in cobalt mines in Apple's supply chain.
In the same year, the Ranking Digital Rights (RDR) Corporate Accountability Index, which rates companies on " commitments and policies, based on international human rights standards", gave Apple a score of 46%. A reason for the low score was Apple's
Lack of governance and oversight over human rights risks, and also lack of clear disclosure of policies affecting users' freedom of expression ”.
Environment
According to Ethical Consumer's rating for environmental reporting, in 2019, Apple received the worst rating. Despite some environmental impacts, Apple's 2019 Environmental Responsibility report included only one dated and quantified future environmental target which was generating or procuring at least 4 gigawatts of clean energy in its supply chain by 2020.
Additionally, the report included sections on the use of potentially hazardous chemicals. The company commented that
Apple products are free of PVC and phthalates with the exception of power cords in India, Thailand, and South Korea, where Ethical Consumer continues to seek government approval for our PVC and phthalates replacement. "
After eliminating the hazardous chemicals, Apple received Ethical Consumer's best rating for its pollution and toxics policy. However, although the company solved this issue, as of 2018 Apple in the United States abandoned the Right to Repair Bill which made the company further contribute to the problem of toxic e-waste.
Politics
In 2019 Apple was awarded the worst mark for strategies that were likely to be used to avoid tax Ethical Consumer. The family tree for Apple Inc on www.hoovers.com showed that the company had subsidiaries in countries such as Ireland, the Netherlands, and Singapore which are considered to be tax havens.
A tax-haven is considered to be a country or jurisdiction that allows large companies to benefit from the low taxation rates available in the country deemed to be a tax haven. This way, the company does not have to pay taxes in the country where it operates.
Despite Apple defending the accusation, the company's explanations were not strong enough and did not convince Ethical Consumers to change the mark. Additionally, there was no country-by-country financial information or reporting and no clear public tax statement confirming that it was the company's policy not to engage in tax avoidance activity or to use tax havens for tax avoidance purposes. As it turned out, by 2019 Apple had a tax gap of $100 billion for the decade and consequently lost a whole mark in the Ethical Consumer tax avoidance category.
Implications of the ethical issues
Ethical issues can have a significant impact on a company's brand image, consumers and employees. The several ethical issues of Apple Inc. mentioned above reflect on how the corporation follows ethical principles set in its business conduct and keeps up with its standards of social responsibility. Despite declaring its honesty, respect, confidentiality, compliance and commitment to society, Apple does not entirely accomplish its promises.
Nevertheless, the company does not seem to suffer the consequences. Its strong brand stands for high prices and stylish technological products. According to the most recent data from 2021, Apple was one of the top 10 consumer electronics companies and best brands in the world. What is more, the company's revenue is constantly growing. From 108.2 billion dollars in 2011, it grew up to 365.82 billion dollars in 2021. Therefore, it can be concluded that the ethical issues did not damage Apple's brand image and did not put off its consumers.
Apple Ethical Issues - Key takeaways
- Apple Inc. is an American multinational technology company that designs and manufactures personal computers, smartphones, tablet computers, computer peripherals, and computer software.
- Currently, Apple is the largest information technology company by revenue and the world's most valuable company.
- Apple's business conduct includes four main principles that guide its business practices: honesty, respect, confidentiality and compliance.
- Apple's actions regarding corporate social responsibility include creating learning opportunities, ensuring health and safety, and protecting the environment.
- Unfortunately, there seem to be several ethical issues with Apple such as poor working conditions such as health and safety risks, child labour, poor environmental reporting, contributing to e-waste and tax avoidance.
Sources:
https://blog.hubspot.com/sales/steve-jobs-quotes
https://www.newworldencyclopedia.org/entry/Apple_Inc.
https: // www. britica.com/topic/Apple-Inc/Desktop-publishing-revolution
https://www.statista.com/chart/24857/total-number-of-apple-stores-worldwide/
https://www.statista.com/statistics/273439/number-of-employees-of-apple-since-2005/
https://www.apple.com/compliance/
https://www.apple.com/supplier-responsibility/
https://www.eoi.es/blogs/marieglueck/2012/05/07/how-serious-is-apple-about-csr/
https://www.ethicalconsumer.org/company-profile/apple-inc
https://www.grin.com/document/160761
https://www.statista.com/statistics/265125/total-net-sales-of-apple-since-2004/
References
- Fig. 1: Original Apple I Computer (https://www.flickr.com/photos/eevblog/14767800987) by Dave Jones (https://www.flickr.com/photos/eevblog/) licensed by CC BY 2.0 (https://creativecommons.org/licenses/by/2.0/deed.en)
