Apple dodges shareholder proposal from NGO on supply chain assessment

Apple has avoided a shareholder proposal from a consumer and workers’ rights campaign group which had called for the US technology giant’s board to conduct an assessment of the human rights risks in its Asian supply chain.

SumOfUs.org, whose advisors include 350.org’s Bill McKibben and SRI consultant Simon Billenness, had said Apple was exposed to “significant human rights risks” because it had outsourced much of its manufacturing to Asia. Such risks, it said, could damage the Apple brand and thus “adversely affect shareholder value.”

Citing examples, SumOfUs.org said a recent investigation found that a Chinese supplier for the iPhone 6 violated Chinese law and Apple’s own Supplier Code of Conduct by failing to pay overtime, making the workplace unsafe and providing inadequate training. As further evidence, the NGO pointed to the recent death of underage workers at Apple supplier Pegatron and recalled the 2010 suicides at Foxconn, a Taiwanese supplier to the California-based tech company.

But Apple – where former US Vice President Al Gore and Andrea Jung of microfinance group Grameen America are directors – has been successful in asking for the Securities and Exchange Commission (SEC) to allow it to omit the motion from its next annual meeting agenda.

The regulator agreed with Apple’s argument that a similar proposal voted on during its 2014 annual general meeting (AGM) failed to get enough shareholder support for re-submission.That motion had been filed by John Harrington and Northstar Asset Management and received the support of investors including Christian Brothers Investment Services, Trillium Asset Management, Calvert and Domini. But among those that voted against were the likes of Norges Bank Investment Management, APG, CalPERS and the Florida State Board of Administration.

Under SEC rules, proposals that fail to get at least 6% support cannot be re-submitted. The earlier proposal had called on Apple to create a special board committee to examine human rights issues within the supply chain.

SumOfUs.org had argued that its proposal was different, saying: “[The earlier proposal] sought the establishment of a new board committee to review human rights policies (not risks), while our proposal takes no position on whether human rights policies need to be reviewed or who would be the appropriate entity to conduct such a review,” it said. Apple’s AGM is likely to take place in the first quarter of next year.

The SumOfUs.org proposal came before an investigation by UK broadcaster the BBC alleged that rules on workers’ hours, ID cards, dormitories, work meetings and juvenile workers were “routinely breached” in Apple’s Asian supply chain. In response, the company said it was “deeply offended” by the report by the flagship ‘Panorama’ programme.