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Apple Ethical Issues

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Apple Ethical Issues

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. 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.

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. 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/

Frequently Asked Questions about Apple Ethical Issues

The main ethical issues with Apple are poor working conditions, child labour, and poor environmental reporting. 

Apple handles ethical issues by introducing a business conduct guide for all employees and partners to follow. It also set many goals to counter the impact of the production processes on the environment and improve working conditions. 

Apple requires all its supplies to treat workers fairly and use environmental-friendly methods in production. However, this is far from preventing all unethical practices such as child labour, e-waste, or unsafe working environments that still exist in certain parts of the world. 

Tax avoidance, e-waste, and oversight over human rights are examples of ethical issues by companies operating worldwide. 

Apple iPhones are produced with the consideration of social responsibility across the worldwide supply chain. However, unethical practices still exist in certain parts of the world. 

Final Apple Ethical Issues Quiz

Question

When was Apple founded?

Show answer

Answer

1975

Show question

Question

Who founded Apple?

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Answer

Steve Jobs, Steve Wozniak and Ronald Wayne

Show question

Question

What was the previous name of Apple Inc.?


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Answer

Apple Computer Inc.

Show question

Question

What was the first Apple’s product?


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Answer

A personal computer

Show question

Question

Which of the founders hand-built Apple’s first personal computer?

Show answer

Answer

Steve Wozniak

Show question

Question

What are the four main principles that guide Apple’s business practices?


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Answer

  • honesty
  • respect
  • confidentiality
  • compliance

Show question

Question

What is CSR?


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Answer

Corporate social responsibility is a set of practices businesses undertake in order to contribute to society in a positive way.

Show question

Question

What are some practices Apple undertakes to commit to a society in a positive way?


Show answer

Answer

creating learning opportunities, ensuring health and safety, and protecting the environment

Show question

Question

Give an example of an ethical issue at Apple.


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Answer

Any of: 

  • poor working conditions such as health and safety risks, child labour, 
  • poor environmental reporting, 
  • contributing to e-waste and tax avoidance

Show question

Question

How does Apple contribute to environmental pollution?

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Answer

Because of the lack of a right to repair bill in the United States, the company contributes to the problem of toxic e-waste.

Show question

Question

How does Apple avoid paying taxes?


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Answer

The company has subsidiaries in countries such as Ireland, the Netherlands, and Singapore which are considered to be tax havens.

Show question

Question

Where was Apple founded?

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Answer

California

Show question

Question

___ is a set of principles designed to guide workers to conduct themselves with honesty and integrity in all actions representing a company.

Show answer

Answer

Business conduct

Show question

Question

___ is a set of practices businesses undertake in order to contribute to society in a positive way.

Show answer

Answer

Corporate social responsibility

Show question

Question

___  is considered to be a country or jurisdiction that allows large companies to benefit from the low taxation rates.

Show answer

Answer

A tax heaven

Show question

Question

Despite some ethical issues, there are also some practices Apple undertakes to commit to society in a positive way. 

Show answer

Answer

True

Show question

Question

Despite its ethical issues, Apple does not seem to suffer the consequences.

Show answer

Answer

True

Show question

Question

Apple's first product was a personal computer hand-built by Steve Wozniak. What was it called?

Show answer

Answer

Apple I 

Show question

Question

Currently, Apple is second the largest information technology company by revenue in the world.

Show answer

Answer

False

Show question

Question

Currently, Apple is the world's most valuable company. 

Show answer

Answer

True

Show question

Question

For its first 30 years, the company was called Apple Phone Inc.


Show answer

Answer

False

Show question

Question

The majority of Apple stores are in the United States. 

Show answer

Answer

True

Show question

Question

For its first 30 years, the company was called Apple Computer Inc. until in 2007 it dropped 'computer'. Why did it change the name?


Show answer

Answer

to reflect its ongoing expansion into the consumer electronics market

Show question

Question

Who's Apple's current CEO?

Show answer

Answer

Steve Jobs

Show question

Question

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 ___ . 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. 


Show answer

Answer

the Democratic Republic of the Congo (DRC)

Show question

Question

In 2019, 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...

Show answer

Answer

46%

Show question

Question

Apple received Ethical Consumer's worst rating for its pollution and toxics policy. 


Show answer

Answer

False

Show question

Question

In 2019 Apple was awarded the worst mark for strategies that were likely to be used to avoid tax Ethical Consumer. 


Show answer

Answer

True

Show question

Question

According to Ethical Consumer's rating for environmental reporting, in 2019,  Apple received the ___ rating.

Show answer

Answer

worst 

Show question

Question

Apple's 2019 Environmental Responsibility report included only one dated and quantified future environmental target which was...


Show answer

Answer

generating or procuring at least 4 gigawatts of clean energy in its supply chain by 2020. 

Show question

60%

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