The long road to corporate transparency

5th March 2014

Apple opens up, Europe shuffles forward, the UK digs its heels in and cries. It’s nice to see progress, isn’t it? Especially when on so many other fronts the world seems to have been taken over by the mad, bad and downright dangerous.

Make it BetterHere at Make It Better campaign towers, we’d been increasingly dispirited by  the wrecking game Lib Dem Vince Cable’s Business, Innovation and Skills (BIS) department had been playing on European corporate transparency legislation.

So it was pretty news to read our old friend Apple Inc’s recent Supplier Responsibility report, which aims to “audit deep into its supply chain and hold suppliers accountable to some of the industry’s strictest standards.”

In November 2012 Friends of the Earth revealed how dangerous and destructive tin mining in this area is destroying lives, forests and coral reefs. Tens of thousands of supporters called on the major smartphone brands to admit to using Bangka’s tin.

Apple was first off the blocks in its enthusiasm to fund and participate in an industry-led group looking at what could be done to help locally, but refused – until now – to do what most of the other top brands wasted no time in doing: be honest with its customers that Bangka tin could be found in iPhones and iPads.

Months of excoriating media coverage, not to mention public frustration, ensued, but on p16 of the report Apple admits to using tin from Bangka province in Indonesia. We can now tip a hat and congratulate Apple on its improving transparency.

Making good Apples

Apple’s 2014 report has garnered a fair bit of praise for the new commitments it makes to ensuring ethical mineral sourcing. This focuses mainly on the horrors of the gold, tantalum, tin and tungsten ‘conflict minerals’ extracted in war-torn Democratic Republic of Congo (DRC), fuelling the fighting there. But it also includes other commitments to, and demonstrations of, transparency, including admitting its use of Bangka tin.

So what makes companies take ethical sourcing seriously? Public awareness, NGO campaigns and great leaders can get issues noticed and the most progressive companies taking a lead, but legislation is essential to creating lasting change across the board.

In response to public pressure, the US Government approved the Dodd-Frank Act. So although imperfect, this important 2010 legislation has been a game-changer in forcing companies to identify where at least some of their mineral raw materials come from.

EU corporate transparency reform – good, but could have been better

That’s why it was so disappointing that the UK government, represented by Vince Cable, gave what were sensible proposals from the European Parliament such a battering last week. In the 3-way discussion between the Commission, the Council of Member States and the parliamentary representatives, the UK and its allies did their best to water down the legislation.

Parliamentary representatives held their ground in important areas, so now thousands of Europe’s largest companies have to report annually on the most significant environmental and social impacts of their operations, all the way up the supply chain to raw material sourcing. They must also disclose “due diligence” plans – what they do to address those risks and impacts. thsi isn’t just good for people and planet, it’s good for the companies too, simplifying reporting guidelines and making it easier for companies to identify and address potential problems.

However, thanks in the main to the UK , only stock-exchange listed companies must disclose their impacts. Billionaire and hedge-fund owned companies like Tory donor Philip Green’s Arcadia Group (which owns Topshop, Topman and, well, most of the high street) can pick and choose, or not bother at all.

Company responsibility – the road ahead

In its 2014 Supplier Responsibility report, Apple has taken a welcome step forward by further recognising that supply chain problems start well before factories. Serious issues remain in its supply chain, but it’s improving its record and moving up the transparency league table.

Next steps should include extending this scrutiny to other raw materials used in its products and packaging, and looking at reporting its total land, water, materials and carbon footprints as part of a plan to reduce its demand for raw materials in the first place. Fingers crossed, we might then see the back of things like this

Vince Cable and the UK government on the other hand have done their best to thwart efforts to push company transparency forward. Even so, the EU law is real progress. It’s also not the end of the road: member states, including of course the UK, will have to transpose the EU legislation into domestic law within a couple of years.

That means whoever forms the British government after the 2015 general election will find said transposition on its to-do list, and that means we can call on the parties, as they’re drafting their manifestos, to commit to a decent Make It Better Law in the UK.

Blog post by Julian Kirby, Friends of the Earth, 4 March 2014.

Subscribe to this blog by email using Google’s subscription service.