How green is Apple?

“A critical evaluation of Apple’s environmental corporate policy

approach and the way it is communicated”

Today’s Agenda...1. Company Profile

2. Effects of Corporate Environmental Policy

3. Corporate Environmental Strategy Framework

4. Group Task

5. Target Audience

6. Key Events in Apple’s Path Towards Sustainability

7. Current Corporate Environmental Policy Approach

8. Corporate Communication

9. Criticism

10. Moving Forward

11. Conclusion

Overview of the Company

Apple is currently ranked...

#1 world’s most powerful brand#1 most valuable brand#1 in market value#2 in profit#26 most innovative company#26 in sales

Apple, was named by Forbes Magazine as the most

admired company in 2008 (Bortree 2009)

Apple Inc. is a world renowned multinational electronics manufacturer; on a national and international level this organisation

is large, powerful and highly visible.

Corporate Environmental Policy

Reasons to adopt a corporate environmental policy:

• Effective environmental management can reduce operating expenses (Yakhou and Dorweiler 2004), allow firms to make better use of resources (King and Lenox 2001), and stimulate innovation in production technology (McDonough and Braungart 2002).

• Firms can successfully leverage superior environmental management for competitive advantage (Cerin 2002) and develop new market niches through green marketing (Kiernan 2001).

• Improved environmental governance practices are viewed as a way to stave off both public protest and regulatory intervention (Reinhardt 1999)

Corporate Environmental Strategy Framework

What elements influence how a firm approaches the development of environmental management initiatives and what can strategists do to influence these elements?

1. Macro Layer2. Secondary Stakeholder Layer3. Industry Layer4. Firm Layer5. Functional Layer

Macro LayerMacro forces are the broadest forces that influence how firms approachenvironmental governance (Grant 2005)

• Economic factors• Social factors• Technological factors• Political factors

Political forces can have a significant direct influence on corporate environmental governance strategy (Kolk 1999)

International environmental treaties:• The Montreal Protocol (1989) which regulates ozone emissions• ISO 14000 is a family of standards related to environmental management that exists to help

organizations minimize how their operations negatively affect the environment, comply with the law and improve their performance

• The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (1992)

Domestic environmental legislation and environmental regulatory policy:• EPA Land and Cleanup regulations

Macro Layer

A significant amount of research has emerged over the past decade in support of StakeholderTheory which postulates that firms must balance strategic objectives to ensure that a broadspectrum of stakeholders’ expectations is adequately satisfied (Rowley 1997). Responses from dissatisfied secondary stakeholders pose significant threats to firms (Khanna 2005)

• Creditors• Government regulations• Union pressure• Interest group pressure• General public

Stakeholder Layer

Stakeholder layerInterest group pressure• Increasingly, environmental organizations and local environmental groups

are exposing poor environmental practice at both firm and industry levels (Carter 2001).

• The repercussions for firms that neglect this threat can be financially damaging

• Apple has been targeted by environmental groups such as Greenpeace & Friends of the Earth– “Cool IT”– “Greener electronics” – “Clean our Cloud”– “Make it better”

Stakeholder layerGeneral public• Public expectations regarding corporate environmental governance have increased

significantly (Deegan 2002). To defend societal interests, concerned individuals and community groups are increasingly involved in monitoring corporate behavior (Cormier and Magnan 2003)

• 95% of EU citizens feel that protecting the environment is important to them personally (-1 point compared to 2007). 58% consider it to be very important (Eurobarometer 2011)

• 92% of MNCs from Europe changed their products to address growing concerns of environmental pollution (Vandermerwe and Oliff 1990)

• (93%) of the 766 participant CEOs from all over the world, declared sustainability as an “important” or “very important” factor for their organizations’ future success.

Industry layerIn 1980, Michael Porter, an authority on corporate strategy introduced his Five Forces frameworkwhich demonstrated how forces impacting a firm’s industry influence the attractiveness of theindustry and define the parameters within which firms in the industry must operate if they are tosucceed in the long run (Porter 1980)

• Type of industry• Competitive practices• Media exposure• Customer (buyer) pressure• Supplier (vendor incentives)

Industry layerMedia exposure• Research indicates that industries which are exposed to a greater level of media scrutiny are

apt to expend greater efforts to publicly disclose environmental governance practices (Adams 2004)

• Firms in high-profile industries must take extra care to ensure environmental management programs are developed in a comprehensive manner in order to avoid environmental mishaps that could lead to adverse (Valentine 2009)

• Apple receives the most press in the mainstream media, representing 15.1 percent of all technology stories in the news (Marsal 2010)

• Media coverage of Apple found to be overwhelmingly positive

• Of the stories analyzed, 42% described Apple as "innovative and superior“ (Marsal 2010)

Industry layerCustomer (buyer) pressure

• In industries where customer pressure to adopt improved environmental practices is high, firms are more likely to adopt more comprehensive environmental strategies to avoid adversely affecting the customer base (Wilmshurst and Frost 2000)

• Consumer awareness of environmental inequities drives sustainable business practices (Young 2010)

• Euromonitor International’s Annual Survey confirmed that over half of respondents globally considered the factors “fair-trade”, “green/environmentally-friendly” and “sustainably produced” to be important when considering a purchase.

Firm LayerFirm-specific forces can be defined as influences on corporate environmental governance that arise as a result of the unique structure of a given firm (Deegan 2002)

• Ownership characteristics• Firm size• Financial health• Age assets• Environmental reputation

Firm layerEnvironmental Reputation• Cerin (2002) and Patten (1992) have shown that in response to publicised environmental

problems, negligent firms have a propensity to adopt stricter reporting standards. Furthermore, Deegan et al. (2000) have shown that publicised environmental mishaps from one firm tend to influence the reporting styles of other firms within the industry.

• Yahoo and Google data centres drove the industry in terms of renewable energy powered facilities

• On the back of those, Apple announced that its north Carolina data centre will be powered entirely by renewable energy by the end of 2012

Functional layerActivities that firms undertake in the environmental governance sphere which directly impact a firm’s market valuation, revenue prospects or cost performance in either the short or long term are all found in the functional layer (Deegan 2002)

• Financial strategies• Brand protection strategies• Cost-control strategies• Quality strategy• Green position strategies

Group Task

Apple’s Environmental Timeline

Apple Products Introduced?

Target Audience

Governments Regulators Employees

Customers General public Pressure groups

Investors Suppliers Media

Distributors Competitors Local communities

NGOs

2004 – The Issue• Apple commits to phase out the use of bromine (Br) and chlorine (Cl)

in its products with the intent to minimize impact on the environment and human health during manufacturing, use, and disposal in accordance with the RoHs Directive

• Apple moves beyond RoHS compliance by restricting additional bromine and chlorine based compounds in consumer electronic products

• Samsung, Nokia, Sony & LG commit to eliminate the use of hazardous chemicals

• Sony Ericsson takes on the complicated task of establishing full chemical inventories for all their product lines

2004 – The Communication“Apple is in many cases ahead of, or will soon be ahead of, most of its competitors in these areas. Whatever other improvements we need to make, it is certainly clear that we have failed to communicate the things that we are doing well” (Jobs 2007)

“Secrecy at Apple is not just the prevailing communications strategy; it is baked into the corporate culture” (The New York Times 2012)

2007 – The Issue

• Partially in response to Greenpeace’s “Guide to Greener Electronics”, Apple devised and publicly announced its environmental policy “A Greener Apple”

• The environmental policy was clearly stated and provided consumers with a progress chart

• Apple stated that they were doing more in terms of being environmentally responsible

• "We were always green but we just weren't sharing it“ (Deeran 2008)

2007 – The Communication

• “Apple have found themselves in the position of being forced to adopt change because their customer base demanded it” (Herron 2010, p.69)

• “Today is the first time we have openly discussed our plans to become a greener Apple. It will not be the last” (Apple 2007)

• “We apologize for leaving you in the dark for this long” (Apple 2007)

• “Apple is already a leader in innovation and engineering and we are applying the same talents to become an environmental leader” (Apple 2007)

2009 – The IssueApple joined US Chamber of Commerce exodus over climate change scepticism (Guardian 2009)

The chamber is against the idea that the EPA should use its authority under the Clean Air Act to regulate greenhouse gas emissions.

“We strongly object to the chamber's recent comments opposing the EPA's effort to limit greenhouse gases” (Novelli 2009)

It can be argued that the move was partially driven by the public interest in the Copenhagen Climate Change Conference

Current Corporate Environmental Policy

Environment Evaluation on environment friendliness of Apple’s services is not easy, since The Company does not actually manufacture the products. The true manufacturers are mostly located in developing countries, where environmental regulations are lax and frequently get Violated (Bertolucci 2009)

Apple documents detailed reports of its environmental progress and energy efficiency designs on official website. A comprehensive analysis of green-gas-emissions is also available, covering the complete products’ lifecycles from manufacturing to retail facilities

Scant information can be found on e-waste recycling operation after collecting these wastes from consumers

Little is known on energy consumption of data computing supporting the iTunes platform

Apple and the Environment:The story behind Apple’s environmental footprint

MANUFACTURING

TRANSPORTATION

PRODUCT USE

RECYCLING

FACILITIES

Young (2010))

Manufacturing• Manufacturing accounts for 61% of Apple’s total greenhouse gas emission

• Apple products are designed to be more powerful and require less material to produce, generating fewer emissions– The iPad became 33% thinner and 15% lighter in one generation– 5% less carbon emissions were generated as a result

• Apple products are free of Lead, PVC, BFR, Aresenic and Mercury

• Apple uses recycled plastics, recycled paper, biopolymers, and vegetable-based inks– iTunes gift cards are made from 100% recycled paper

• Supplier Code of Conduct and Supplier Audit Codes are published online

Transportation• 5% of Apple’s greenhouse gas emissions are a result of transporting our products

from assembly locations to distribution hubs in regions where our products are sold

• Packaging is designed to be “efficient” – slim, light and protective – packaging for iPhone 4 is 42 percent smaller than for the original iPhone shipped in 2007

Product Use• The use of Apple products generates 30% of Apple’s total greenhouse

gas emissions

• Products are designed to be as energy efficient as possible- The Mac Mini takes one fifth of the power consumer by a single 13-watt CFL

lightbulb, making it the most energy efficient desktop computer in the world

• Apple is the only company to date who has all of its products certified by ENERGY STAR

Recycling• 2% of Apple’s total greenhouse gas emissions are related to recycling

• Materials used by Apple including arsenic, aluminium, and polycarbonate are reclaimed by recyclers for use in new products

• Mac Book Pro built in battery has increased lifespan of 3x the average laptop

• Apple houses its own recycling programme – In 2010 and 2011, Apple achieve a worldwide recycling rate of over 70%– The last reported numbers from Dell and HP were each lower than 20%

Facilities

• Apple’s corporate offices, distribution hubs, data centers, and retail stores account for 2% of the Company’s total greenhouse gas emissions

• Apple provide a Commute Alternatives programme for all employees- More than 1,100 Apple employees go to work each day on free biodiesel commuter coaches

• Apple reduces energy use in their facilities by utilizing renewable energy — eliminating 30,000 metric tons of CO2e emissions in Austin, Texas; Sacramento, California; Munich, Germany; and Cork, Ireland

• Apple Data Centre in North Carolina

The way it’s communicated• Global Reporting Initiative (GRI)

– Acts as an indirect method of communication

• Facilities Report

• Investor Report

• Supplier Responsibility Progress Report

• Environmental Progress Chart

• Relationships with selected media

• Green adverts since 2008

Criticism• The Company is criticized for not giving timelines for further phasing-out other

hazardous substances such as DEHP and phthalates, which leads to an unfavorable overall Greener Electronics Ranking position

• The planned obsolescence, or the designed disposability, may be the key problem of Apple’s green strategy

• Apple adopts the cradle-to-grave way of consumption, with no innovative considerations on creating a reusable product line or creating a green manufacturing chain

• Lack of stakeholder engagement strategy (Harvard Business Review 2012)

• Lack of triple bottom line thinking – People, Planet, Profit (Eurocert 2012)

• Low level of overall transparency (CNN 2012)

2012: Moving forward

“We are all living during a time when people want and expect their leaders to be more human, less perfect and at times a bit

vulnerable – regardless of hierarchy or rank” (Forbes 2012)

• More transparency– Increased credibility, trust and strengthened brand image

• Apple to pioneer a unified standard for environmental reporting

• Interaction with consumers e.g. Dell’s IdeaStorm

Conclusion • Apple overview • The importance of a corporate environmental policy• Application of a corporate environmental strategy framework• Apple’s relationship with the media• Key events

– 2004: Bromine and Chlorine– 2007: A Greener Apple – 2009: Withdrawal from the U.S. Chambers of Commerce

• Current corporate environmental approach• Corporate communication• Criticism• Recommendations

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