Apple released its 2017 Supplier Responsibility Report today, as concern mounts over the potential impact of a draft directive from the Trump administration that would suspend legislation requiring companies to disclose whether their products contain conflict minerals.
Conflict minerals — substances like tantalum, tungsten, tin, and gold — are used in a variety of popular electronics, including smartphones. They are typically sourced from war-torn countries including the Democratic Republic of Congo, where their mining and sale has historically funded armed groups associated with murder, rape, and other human rights violations.
In an interview on Friday, Paula Pyers, Apple's senior director of supply chain social responsibility, told BuzzFeed News that 2016 was the company's best year on record in terms of improvements in the supply chain. Apple conducted 705 assessments of its supply chain in 2016 and removed three suppliers for failing to meet its standards on labor and human rights, environmental standards, and health and safety. (Apple conducted 574 such assessments in 2015.) Separately, in 2016 Apple audited and booted from its supply chain 22 smelters of conflict minerals.
"We've been really clear with our suppliers that, notwithstanding any changes to regulations — or deregulation, if you will — we'll continue to run the same program we've been running for the last six years,” Pyers said. “We will continue to drive third-party audit programs. We'll continue to dig really deep, and stand up accountability and our incident report system. Candidly, we don't plan any change in that which we are doing."
Last year, Apple celebrated a supply chain milestone, announcing that 100% of its suppliers of conflict minerals submitted to third-party auditing. While well over 1,000 companies file annual conflict minerals reports with the US Securities and Exchange Commission, few have managed to fully audit their supply chains.
"Notwithstanding any changes to regulations, we'll continue to run the same program."
In February, news broke that the Trump administration was considering loosening regulations on businesses that buy conflict minerals; a leaked draft directive would put a Dodd–Frank rule requiring companies to report conflict mineral usage on hiatus for at least two years.
Officials in the Democratic Republic of Congo are concerned that removing the rule could spark armed conflict in the region, Bloomberg reports. It's estimated that 5.4 million people died between 1998 and 2007 in the DRC as the result of a civil war partially funded by proceeds from control of conflict mineral mines. At the time she spoke with BuzzFeed News, Pyers said she was aware Congolese officials had recently expressed "deep concern for repression of human rights that could occur on the ground."
Last month, Apple told the Washington Post that it doesn’t want to see conflict mineral regulation rolled back, a point Pyers reiterated to BuzzFeed News.
“We're going to continue to do what we're doing," Pyers said. "We're going to continue to press for third-party audits. We've already put that message out to our smelter partners earlier this year. We're going to continue running the program we run today. We're going to continue looking beyond audits to incident reports on the ground, and in the case of cobalt, working on the ground level. We'll continue to call for collective action because we truly believe, whether it's regulated or self-regulated, this is the way business should be run, and the way we'll continue to run our business.”
Pyers said Apple will file its conflict minerals report with the SEC by the required late May deadline. She noted that the company has had “quite a bit of dialogue” with the agency and members of the Trump administration over the possible suspension of the conflict minerals reporting requirement.
The SEC is currently accepting public comments on the reporting requirement; the Electronic Industry Citizenship Coalition, of which Apple is a member, filed a letter in support of regulation on March 14. But Pyers said for Apple’s efforts at transparency to be effective, other companies will have to follow suit.
“If more companies do not come to the table to press for change through their own supply chains, particularly in the absence of regulation, the types of systemic change we are all seeking are frankly not going to occur,” Pyers said.
Apple’s 2017 Supplier Responsibility Progress Report includes another milestone: For the first time, the company has published a complete list of its cobalt smelters. It says all of them are participating in third-party audits.
Last year, a Washington Post investigation into cobalt supply chains forced Apple and other tech companies to acknowledge that some of the cobalt — which is not officially considered a conflict mineral — used in their products was coming from smelters that relied on child labor and engaged in other human rights abuses. In December, Apple joined other tech companies in forming the Responsible Cobalt Initiative; at the time, Amnesty International’s Mark Dummett told the Washington Post that he hoped Apple’s next step would be to “disclose the names of their cobalt smelters.”
Said Pyers, "We think transparency is a critical component of standing up as a global leader and saying, 'Here's where we are on cobalt. Here's our map. Here's our smelters. They're in audits.' Just like we do with our manufacturing data, we'll be the first to say it's not perfect. We have work to do."
Also included in Apple’s 2017 Supplier Responsibility Report: an update on the company's supply-chain worker training programs. Apple says that in the past year it trained 2.4 million people on employee rights and provided career growth and life skills programming to 689,000 people — all in local languages. To date, the company has trained some 2.1 million students via its Supplier Employee Education and Development program. “We think education is hugely important," said Pyers. "That’s information these people take with them anywhere they go — whether they work in the Apple chain, or anyone else’s."