Apple code of conduct proves a real asset

Jun 15 2006 By Matthew Rippon, The Journal

The popular idea that life at companies like Apple Computer, Google and Yahoo! is one long stream of beanbag board meetings and company barbecues was shattered at the weekend with the Sunday newspaper exposé on conditions at Foxconn, Apple's Taiwanese manufacturer of the iPod Nano.

Apple's premium-priced products are aimed at the chattering classes, whose weekend shopping is laced with fair trade teabags and organic bean sprouts. Forced labour doesn't really fit in with their world view.

Make no mistake, this kind of story can devastate a company like Apple. Think of the damage wrought by the revelation in 1989 when, following the discovery of carcinogens in its product, Perrier was forced to admit that its water was not `Naturally Sparkling' as their advertising had claimed for so many years, or how Shell managed to blow decades of carefully constructed environmental credit in one foolish decision to sink an oil platform full of toxic chemicals. This crisis management is the other side of brand protection.

In these situations there are always three immediate options available. Say nothing at all and hope it all blows over - not an option for Apple, whose every utterance is analysed by a large and active web community. Deny everything and hope your customers believe you rather than probe deeper - again, not an option bearing in mind the nature of Apple's market. Or finally, seize the initiative and make the agenda.

Fortunately, Apple had the foresight to launch a code of conduct for its suppliers in November 2005, which covers issues such as respect for human rights, working hours, child labour and so on. A wise move for a company dependent on manufacturers based in parts of the world where such issues are unquestionably subordinate to the pursuit of the mighty dollar.

Apple jumped on the exposé by turning the tables and changing a huge negative into a positive. Apple issued a statement the very next day, this Monday, referring to its code of conduct and promising swift and thorough investigations. Apple has portrayed this as an opportunity to present its Supplier Code of Conduct as not just another example of wishy washy corporate nonsense but a real enforceable policy with teeth.

And as long as that is what actually happens, we'll all continue to love our iPods and Macs and thoughts of Apple will fill us with warm fuzziness over the brighter side of western business practices.

Matthew Rippon is a Senior Solicitor in the Intellectual Property and Technology Team at Watson Burton LLP. Contact him on 0191 244 4382 or at matthew.rippon@watsonburton.com