Brands’ Supply Chain Environmental Management Can Help Solve Conflicts with Local Communities

Kate Logan, Institute of Public & Environmental Affairs (IPE)

Brands that source from factories with significant environmental impacts should take responsibility to actively and transparently manage the environmental impacts of their supply chains.

In recent years, environmental problems have surpassed labor disputes, land seizures and other social conflicts to become the most common catalyst for mass incidents in China. According to the Chinese Academy of Social Science’s 2014 Annual Report on China’s Development of Rule of Law, between 2000 and 2013, environmental pollution instigated around half of mass incidents in China with 10,000 or more participants.

In order to prevent and solve conflicts between communities and factories, brands that source from factories with significant environmental impacts should take responsibility to actively and transparently manage the environmental impacts of their supply chains. IPE’s experiences in working with both big-name brands and their local suppliers demonstrates that brands’ willingness to use publicly available environmental information to influence their suppliers’ behavior can play an important role in protecting the rights of local communities. Moreover, as third parties trusted by both enterprises and communities, environmental groups can provide companies with a valuable channel for addressing and solving not-in-my-backyard (NIMBY) problems.

Take the example of Apple, who regularly screens its supplier list against IPE’s Pollution Map Database of over 240,000 government-issued environmental violation records. Through these supplier screenings, Apple identified records of reported complaints against Hong Fujin Precision Engineering (Taiyuan) Co. Ltd., a subsidiary of Apple’s direct supplier Foxconn.

The Foxconn Taiyuan facility began operating in 2006. In 2008, the Qiheng Oasis community was built next door, with only one road separating it from the factories. After the community was established, exhaust from the factories triggered a series of conflicts between the factories and the community. According to statistics provided by the Taiyuan Development Zone Environmental Protection Bureau, in 2012, there were as many as 843 complaints about foul odors from the factory reported by residents in the surrounding area.

To address the conflicts between Foxconn Taiyuan and local residents, Apple sought IPE’s assistance to contact local community representatives, who were invited to participate in a transparent, supervised third-part audit. Working together, the auditors, Apple, Foxconn Taiyuan and NGO representatives determined that the foul odors were primarily caused by volatile organic compounds (VOCs) produced during spraying processes and compounded by the odor of the facility’s wastewater treatment plant. 

From September 2013 to June 2015, under encouragement from Apple, the factory continued communicating with community representatives, handled feedback and complaints, and accompanied residents on several nighttime factory visits to identify remaining problems. One by one, the factory shut down or relocated the main odor-emitting production facilities in the areas of citizen complaint.

To further promote positive interaction between the company and residents of the surrounding area, environmental management staff from the factory’s customers visited Taiyuan several times, taking the initiative to seek feedback from residents and assisting Foxconn Taiyuan to establish effective channels of communication to respond to complaints. Once residents in the surrounding area feel that the company is emitting odors or causing other environmental problems, they can directly call Foxconn’s representatives to establish contact with Foxconn. As a result of this direct communication channel, environmental complaints against the company have dropped significantly, and the relationship between the local community and the factory has greatly improved. 

This case has been adapted from IPE’s 2015 CITI Annual Evaluation Report.