Technical Notes for case 8: Apple and its suppliers: Corporate social responsibility. Case Instructor: Amale ScallyBFC5130: Case Studies in Banking and Finance, Semester 2, 2020 (Teaching Week Nine-Case Eight)
LEARNINGOBJECTIVES1.Introduce the concepts of corporate governance, corporate social responsibility (CSR) and sustainability.2.Examine and analyse different rationales for embedding a concern with CSR in the company. 3.Evaluate ways to embed a commitment to CSR and sustainability within a company.4.Understand the challenges in addressing corporate social responsibility issues through (internal) regulation.5.Analyse the trade offs faced by companies as they commit to social commitments whilst striving for strong financial returns.
CASE SYNOPSISThis case is set in 2014 and finds Apple implicated in alleged labour rights violations in its supply chain. These alleged violations relate to Pegatron, a large Apple supplier that specialises in the assembly of iphones. It is not the first time Apple finds itself in the spotlight as it faced similar allegations in 2009. At the time, another Apple supplier, Foxconn, was accused of breaching labour rights and this had led to changes in Apple’s CSR commitments. Although Apple had vowed to overcome these issues, the case demonstrates that these are ongoing and difficult issues to overcome. Apple is now accused of breaking “promises”. The case explores Apple’s options in response to these new alleged violations. This case offers insights into the complexity of CSR issues, especially in the context of cross-border, inter-organisational settings.
Business and EconomicsTechnical ContentCORPORATE GOVERNANCE, SOCIAL RESPONSIBILITY and SUSTAINABILITY: The case of AppleAdditional Reading: references provided throughout for further reading as required; further research is strongly encouraged.
WHAT IS CSR?
CSR and CORPORATE GOVERNANCECSR can be viewed as a model of corporate governance (CG) which extends the fiduciary duties of companies towards the firm’s shareholders to also fulfilling fiduciary duties towards the firm’s stakeholders (). This constitutes a distinct shift from adopting a purely “maximise shareholdolers’ wealth” approach to taking into account management decisions on various stakeholders.
CORPORATE GOVERNANCEBusiness dictionary definition:The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with all its stakeholders (financiers, customers, management, employees, government, and the community). The corporate governance framework consists of (1) explicit and implicit contracts between the company and the stakeholders for distribution of responsibilities, rights, and rewards, (2) procedures for reconciling the sometimes conflicting interests of stakeholders in accordance with their duties, privileges, and roles, and (3) procedures for proper supervision, control, and information-flows to serve as a system of checks-and-balances.