China Environmental Groups Go With Plan B, Single Out Apple and Foxconn

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I’ve written about this sort of thing many times in the past, so pardon the repetition. A new report came out (the PDF file is here), issued jointly by five China environmental groups, that discusses many of the pollution problems of the China electronics industry. Two companies in particular are taken to task: Apple and Foxconn. The Financial Times had an article on the topic, plus you can look at the coverage in most of the major papers.

While pressure on industry by NGOs can achieve real results, I still think of it as a sideshow, or a Plan B. Why? I worry that it takes some of the heat off of the folks whose primary responsibility it is to keep the air and water safe: the government.

Look, if I was working for a China-based NGO, I’d much rather write a report criticizing Apple than the government. The former gets you a great deal of press coverage, while the latter can result in serious legal consequences (e.g. getting arrested).

So I get the idea here. And I also understand that Apple has been particularly uncooperative. As the report highlights on page four:

During the past year and four months, a group of NGOs made attempts to push Apple along with 28 other IT brands to face these problems and the methods with which they may be resolved. Of these 29 brands, many recognised the seriousness of the pollution problem within the IT industry, with Siemens, Vodafone, Alcatel, Philips and Nokia being amongst the first batch of brands to start utilizing the publicly available information. These companies then began to overcome the spread of pollution created by global production and sourcing, and thus turn their sourcing power into a driving force for China’s pollution control.

However, Apple has become a special case. Even when faced with specific allegations regarding its suppliers, the company refuses to provide answers and continues to state that “it is our long-term policy not to disclose supplier information.”

At the same time, I understand what’s motivating Apple, or any other company faced with similar problems. Why is Apple being less cooperative than some of the other targets of these groups? Because the company has decided that it is better off not doing so. Period.

Let’s not pretend that these other companies are somehow more moral, or that their executives or Board are “taking the high road.” It’s possible, but I would be shocked if that were the case.

Companies make decisions based on their bottom lines, and when they decide to be “green,” in most cases, the company has been convinced that doing so is a good idea financially, or at the very least that doing so will not result in a significant hit to profits.

I agree with the Milton Friedman way of thinking about corporations. They exist to make money, and wistfully hoping that they will reflect some set of moral values is an exercise in futility.

Where I part company with Friedman, though, is advocating for vigorous government regulation. If companies will do whatever they can to avoid costs, then it is up to society (i.e. the government) to set out the rules for companies. These rules are the limits that we, as a society, place on company behavior. Government rule making is therefore an expression of our values.

For Apple and Foxconn, they are mostly just maximizing their profits within the system. I don’t mind that these groups are criticizing them, but I wish they could come up with a useful way to channel that energy into a safe way to lobby the government here towards better enforcement of environmental laws. While I admit the limits of NGOs in China, I also believe that government action is the only way to achieve systemic change.

5 responses on “China Environmental Groups Go With Plan B, Single Out Apple and Foxconn

  1. allroads

    Stan

    2 years ago 140 line workers suffered from inhaling nHexane. An illegal chemical. One that some reports was specifically asked for by Apple because of its effectiveness.

    Yet those employees have not been compensated.

    Are you going to tell me Apple has no responsibility for that?

    Also, with respect to what “others” are going through (as if that is any excuse at all), Nokia (a direct competitor of Apple) launch a full scale audit in July 2009 of that supplier as they heard that line workers were being hospitalized from chemical exposure.

    Apple’s report states that they only learned of the problem in January 2010.

    There is simple no comparison. Nokia acts because they had the people on the ground, and have invested in a process. Apple DOES NOT ACT because they see no reason to. They do not feel there is any economic interest in their attention of the issue, nor that the lives of those in the factor (or outside) is of enough value to have a negative impact on the brand.

    R

    1. Stan Post author

      Rich,

      I never said Apple wasn’t responsible. I also never said that NGOs shouldn’t criticize bad practices. My point was that this is Plan B, that the only way we’re going to make great strides is via tough government action. Companies will always take the easy road, unless they are either forced to or it becomes worthwhile financially. (Sometimes boycotts and public awareness can make the latter happen, but it’s difficult.) As you said, Apple does not act because they see no reason to — this is one of my central points.

      As with IP and other legal issues, it all comes down to enforcement.

      1. allroads

        Ok. I was on a lot of coffee, and had just given a 15 minute lecture on the report to my students.. so, I jump a bit on that one.

        With regard to the role of regulation (and enforcement) I would agree that (1) regulations should exist and (2) that those regulations should be enforced.

        However, I think it is the market that will drive Apple forward, not regulations. Because, as we continue to see, Apple sees about as much reason to ensure their suppliers are compliant with the law as they do with any basic moral guidelines.

        It is the fact that in 2008, Asia was classified as other income, and now it is 30%+ of their top line…. and with another 20+ stores (and the number of potential protests sites) coming online in China … their risk of these continued practices will grow.

        R

          1. allroads

            I think legal solutions will only get you so far.

            Apple (and others) will end up paying more because they are only “committed” to “following the law”, a lesson that was proven Nike, because consumers do not care about the law at the end of the day. If your supply chain is wreaking environmental and human havoc, at the same time your firm is sitting on 72 billion in reserves, consumers are going to act.

            It is simply a matter of thresholds at the local level… and for Apple, a firm who gets 1/4 of its revenue from China, their decisions to maintain their current processes is mind boggling.

            The issues they face are not expensive to fix, and it should not take a lawyer for Apple to understand that.

            R