New Apple Report Spotlights Environmental Protection Efforts

(Beijing) — Technology giant Apple Inc. has released its latest corporate responsibility report with a growing emphasis on the environment, highlighting changing priorities in the important China market where much of its manufacturing occurs.

Analysts called the latest edition of Apple’s annual Supplier Responsibility progress report as much a public relations exercise as an effort to improve its corporate practices. In China, that effort targets both consumers and government officials, who have placed growing emphasis on cleaning up the nation’s polluted air and water, depleted forests and other environmental protection efforts.

Apple is also paying close attention to the important China market as its iPhone sales there drop due to growing competition from homegrown rivals like Huawei Technologies Co. Ltd. and Oppo Electronics Corp.

About 98% of Apple’s 705 suppliers audited now comply with local rules saying employees must work no more than 60 hours per week, an all-time high, according to the company’s report released on Monday in the U.S. It also said that more than 2.4 million workers at those suppliers were trained about their rights last year.

A quality control specialist inspects a completed iPhone. Photo: Apple

Such a focus on fair treatment of workers was traditionally a staple in such reports and audits not only by Apple, but many other major Western manufacturers that used China and other developing markets as their main production bases. But as environmental awareness rises in China, that element has become equally important in Apple’s efforts.

In its latest report, Apple said all of its final assembly sites in China received a globally recognized verification that they handle all waste in environmentally responsible ways such as incineration and recycling. It added that its efforts since 2013 have saved more than 3.8 billion gallons of fresh water, and also highlighted its efforts at reducing carbon emissions and monitoring the use of dangerous metals like cobalt.

Those efforts come as Chinese become increasingly aware of the harm the nation has suffered due to its rapid industrialization, especially in terms of air and water quality. In a bid to play to those concerns, Apple has announced previous efforts to build solar power plants and develop forestry projects in China.

“From stricter standards to improving working conditions and protecting the planet, Apple raises the bar higher for its suppliers and the industry,” the company said in a statement released with the report.

Apple relies strongly on China for big portions of its production, especially components and manufacturing. Accordingly, it wants to show it is being a responsible player in the market, said Sean Kao, an analyst at IDC.

“Apple makes high-end products, so they require their suppliers meet these qualifications to show they’re a responsible corporate citizen,” he said. “There’s also a public relations element. The government and ordinary citizens would like this kind of report.”

The report may have some history in previous labor problems associated with Foxconn, one of Apple’s chief production partners, said Brock Silvers, managing director at Kaiyuan Capital, an investment advisor. He also questioned the public relations value of the report among average Chinese, and suggested the company focus more on its product portfolio to shore up its sliding position both in China and globally.

“Chinese consumers are decidedly uninterested in carbon emission reductions or cobalt sourcing,” said Silvers. “Given Apple's declining China market share, investors might prefer for (CEO) Tim Cook to fully focus on developing a new generation of winning products.”

Contact reporter Yang Ge (geyang@caixin.com)