Socially responsible companies are fast becoming rare. Last month Apple was accused of tax evasion in Italy. This was bad news for Apple’s fans and corporate social responsibility pundits! According to La Repubblica reports, Apple is supposed to pay the Italian government 318 million euros in a settlement. Why would the company not pay taxes? This has definitely angered the Italians.
About Apple: the global iconic brand
Interbrand, a well-known brand consultancy, has ranked Apple the topmost brand in their best global brand report in 2015. According to Interbrand, Apple brand value is $170,276 million which makes Apple the most likely contender to become a trillion-dollar brand.
No doubt that Apple has become an iconic brand due to its relentless focus on consumer experience. It is delivering the best results through its innovative products. People are willing to pay a premium price for anything named Apple. Apple is aggressively expanding across industries building partnerships to deliver better values through its products. It is working out great for the company bottom line. Fair enough!
Is Apple a socially responsible company?
Despite its great business performance in the market, why is Apple accused of tax evasion in Italy? What is the motivation behind such an unworthy business practice? Is Apple driven by the usual impossible-to-satiate corporate hunger and greed? Or is it the usual cut-throat capitalism making Apple ditch social responsibility to seek comparative cost advantage?
EU commission is currently investigating the issue of parking revenues by corporations in low-tax countries. Apple, Google, Twitter and Facebook etc. are all present in Ireland using the double Irish tax arrangements. Obviously, Ireland has the lowest tax rate in EU. But is this practice of using loopholes and dodging taxes ethical?
Apple has also been criticized for not declaring overseas earnings with the US government. But does the US has independent law-makers to really investigate big brands like Apple and expose their socially irresponsible business practices?
If you take a holistic view of the situation, then everything is linked to everything else in the long-run. Although it would be hard to prove in a court that corporate fraud is directly linked to the loss of human life. But it definitely has adverse effects on social and economic stability. In 2013, Aljazeera report titled as ‘Suicides rise as Italy’s economy slumps’ highlighted an increase in suicide rate linked to financial problems and joblessness in Italy. (also see: In debt or jobless, many Italians choose suicide).
According to La Repubblica, Apple is supposed to pay 880 million euros but a settlement was reached after negotiations. So Apple will pay 318 million euro now. Why not 880 million euros if the Italians can prove it? Hopefully, some justification is released on this by the government. Apple is accused of tax fraud from 2008 to 2013. Note this is the same period of great distress for Italian people due to the bad economic situation leading to rising in suicides among people. Apple’s business practice of avoiding taxes can only be termed as reckless, irresponsible and exploitative towards the people of Italy in the time of distress.
Corporate social responsibility and consumers’ role
The problem is that these corporations seem to avoid social responsibility whenever they can. Earlier in 2010, Apple’s supplier Foxconn was accused of child labor and forced employment ( see International business ethics: focus on China by Stephan Rothlin, Dennis McCann, p160-161). Workers were reported to have committed suicides due to harsh work conditions. Yes, ‘work slavery’ is the proper word to describe the situation. Foxconn clients also included other household brands such as HP and Dell.
After the severe media backlash because of Foxconn’s scandal, Apple claimed to have tightened audits of its suppliers. But it is surprising that companies like Apple with such advanced market intelligence system would not know about the issue of child labor down there on the suppliers’ premises.
Consumers are equally guilty and irresponsible if they keep their mind shut. Fortunately, now increasing numbers of people are scrutinizing corporate practices of big brands. There are pressure groups actively highlighting and exposing unethical and socially irresponsible business practices. A company propaganda can be rendered useless by a lone consumer voice in the interesting era of social media.
We can hope that in future there will be more checks on global brands to make them socially responsible. In case of Apple, it has the greatest brand equity and it is better for its own good to avoid unethical and socially irresponsible practices. One can hope that Apple would stick to its high brand standard to sustain its positive brand knowledge, brand differentiation and Brand differential response.
Rich corporations and social responsibility
It is time that Apple and other big corporations use their big money towards building a peaceful and prosperous world. We need their contribution to have less global warming, less violent conflicts, fewer epidemic diseases, cleaner water to drink, cleaner air to breathe, less polluted seas, and a stable social order with fewer suicide rates and drugs.
After all the world does not need big innovative brands at the expense of society and the ecological environment.
Plz, remember to think twice before you buy! So better support local and responsible small businesses. Also, do make the right kind of noise when you can against the less socially responsible companies.
I thought I should ask you a few questions:
1: So what should you do if the brands you love so much or need so badly, is socially irresponsible?
2: Do you know any other brand that has been in the news for some scandal? Please share!
3: Do you research to find out whether a brand is socially responsible or not before you buy?
Please share your thoughts in the comment section below!