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Apple investors vote for 'civil rights audit' but reject China forced labor proposal

by Zachary Halaschak, Economics Reporter

March 04, 2022

Apple investors bucked the company’s recommendations and approved a “civil rights audit” while rejecting a proposal calling for a report on Chinese forced labor.

The civil rights proposal approved on Friday shows that shareholders are increasingly prioritizing issues such as race and the environment in investing. At the same time, though, Apple has faced scrutiny for its business practices in China, which has been accused of committing genocide in Xinjiang.

“The vote today on the #civilrightsaudit proposal shows that investors are expecting accountability from the company when it comes to its DEI and civil rights related commitments,” SOC Investment Group, one of those backing the proposal, tweeted after the vote. The proposal was also supported by the Service Employees International Union and Trillium Management.

The proposal itself calls for a third-party audit of the tech giant’s policies that will provide recommendations about how Apple can improve its handling on matters such as gender pay equity and leadership diversity.

“We’re going to take the company’s own metrics and say, ‘OK, how do you live up to your own commitments?’” Dieter Waizenegger, executive director of SOC, told CNBC. “Does your activity actually move the needle? Or is it just PR?”

Apple had encouraged investors to shoot down the proposal because it says it's already living up to its expectations.

“Apple already fulfills the objectives of the proposal in several ways, including through impact and risk assessments, active governance and Board oversight, engagement with our communities and key stakeholders, and regular, transparent public reporting,” the company said in its proxy statement.

The other nine shareholder proposals, all of which were opposed by Apple, were shot down by investors on Friday, including one aimed at looking into how the company’s business intersects with forced labor in China.

The proposal called for a report on the degree to which Apple’s policies and procedures safeguard workers in its supply chain from forced labor, “including the extent to which Apple has identified suppliers and sub-suppliers that are at significant risk for forced labor violations, the number of suppliers against which Apple has taken corrective action due to such violations, and the availability and use of grievance mechanisms to compensate affected workers.”

The supporting statement for the forced labor proposal said there have been reports that at least nine companies in Apple’s supply chain have been involved in the Chinese government’s forced labor program.

China has faced allegations that it is committing genocide against Uyghur Muslims in the Xinjiang region of the country.

“The proposed report is intended to mitigate this regulatory risk, given Apple’s dependence on suppliers operating under a government accused of genocide,” the proposal’s supporting statement read.

Various companies have faced criticism for their business ties to Beijing in light of the alleged genocide. For example, the conservative nonprofit organization Consumers’ Research has been running a massive pressure campaign targeting investment giant BlackRock and CEO Larry Fink, accusing them of cozying up to the Chinese government.

Shareholders also approved Apple CEO Tim Cook’s hefty compensation package despite some who expressed concerns about the $99 million bundle.

Apple’s board, which includes Cook, Chairman Arthur Levinson, and former Vice President Al Gore, was also accepted on Friday.


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