Apple Launches Audit of Chinese Suppliers

By: Kathrin Hille in Beijing and Joseph Menn in San Francisco

(CNBC NEWS) Apple has hired an outside specialist firm to help audit the environmental practices of its suppliers in China following a series of critical reports by activists.

AFP | Getty Images Chinese workers assemble electronic components at the Taiwanese technology giant Foxconn's factory in Shenzhen. Foxconn is a major supplier to Apple.

The maker of iPhones and iPads met a coalition of environmental groups in China on Tuesday and told them the firm was engaged in audits of suppliers with which they had found fault. The audits of 11 suppliers so far followed a meeting in August as the coalition prepared to release a sharply critical report.

Ma Jun, director of the Institute of Public and Environmental Affairs and leader of the coalition, said the audits represented “progress” but more could be done. “This is just the beginning and not the end of it,” he said.

The unprecedented dialogue comes as Apple tries to find a new balance between the secrecy with which it guards its processes and the potential public relations fallout from being targeted by activists on the environment, labor policy or other areas.

The groups want multinationals in the technology sector to address environmental and health problems in factories that make parts or all of their products.

They focused on Apple early this year after the US company, said Mr. Ma, refused to respond to their inquiries and address problems at supplier plants raised by the groups.

In an annual update on its website, Apple discloses how many suppliers are faulted for violating Apple’s environmental policies. But it does not name them or spell out the violations.

In January, Mr. Ma’s report first put Apple at the bottom of a list of 29 companies including Hewlett-Packard, Samsung, Sharp and Nokia.

In late August, the groups prepared another report in which Apple was accused of using suppliers with public records of environmental violations and taking “advantage of the loopholes in developing countries’ environmental management systems”.

It listed a vast array of factories in different parts of China with different kinds and levels of pollution problems.

In one case, local people were quoted as saying they believed that the water in a ditch had been polluted by two factories and this had led to rising rates of cancer. In another case, researchers from the groups found illegally high levels of heavy metal contamination in water taken from a culvert leading from the factory in question to a lake.

Some of the companies cited in the report have been listed by analysts as suppliers of components for Apple products. Apple told the activists that some of the companies were not their suppliers.

On Wednesday, Apple declined to discuss the meeting.

A recent report card from Greenpeace that grades electronics companies on issues including manufacturing practices, their own energy consumption and the materials in their products ranked Apple behind HP, Dell and Nokia but ahead of Sony, Samsung and others.