Hogeschool-Universiteit Brussel

Campus Stormstraat Stormstraat 2 1000 Brussel

ENVIRONMENTAL ISSUES IN TECHNOLOGY FIRMS:

A CASE STUDY: APPLE INC.

Woumans Gert Student number: 146589 1st year Master Commercial Engineer, 4NZ

Prof.: Prof. Dr. I. Moldorez Corporate Social Responsibility

TABLE OF CONTENTS
What is the impact on the environment? How does Apple deal with it? Views from KBC Views from Rank a Brand Views from Greenpeace Views from myself Conclusion Conception Supply chain Reprocessing Works Cited Endnotes 1 1 1 2 2 4 5 5 5 5 6 6

WHAT IS THE IMPACT ON THE ENVIRONMENT?

Computer companies play a increasingly big role in our society. The continuous growing of the industry since the 1980s has also boomed the environmental impact of this sector. Because of this, they have garnished a lot of attention from the activists, the government and consumers. They feel that the companies should be more active on decreasing their impact and that the impact should be seen at its entirety: namely before, during and after the use of the product. This implies an approach that includes the conception, the supply chain and the reprocessing of the product. In this paper I will try to give an overview of the problems and how a specific company, Apple Inc., tries to deal with them. Lets start with a brief overview of the conception of the product. Here, we focus on the materials used in the product, with special attention to toxins. According to Greenpeace, toxic chemicals threaten our environment, ourselves and ultimately our own future. Because when reprocessing the product, the toxins are released into the environment and dumped like on scrapyards in Asia where even children are directly exposed to them. In their Guide to greener electronics, Greenpeace constantly monitors and rates a select number of high profile companies, one of which is Apple. (Greenpeace, 2010a) Then there is the production phase. It is expected from end-product companies to monitor their supply chain and take responsibility for it. In the case of Apple, these are mainly other companies, because of its vertical disintegration. They produce the designs of Apple. We can therefore account the use of toxins to the design phase, but the GHG-emissions cannot. These are the result of transport and energy used for production. (Rosen, Bercovitz, & Beckman, 2001) The conception phase also affects how the product interacts with the environment during the use. This is mainly because of energy usage, and consequentially its carbon dioxide emission (CO2) and other green house gasses (GHG). Energy efficiency is key to reducing this. Then after an electronic product has been used, which mainly impacts energy usage, the product must be properly disposed. This often isnt the case, as this so-called E-waste ends up on wastelands in Asia, creating enormous health and environmental hazards. Although, again the design of the product plays a large part in this, it cannot be solely attributed to the conception phase. Companies are encouraged to voluntarily take back their old products, so that the recycling process can be done properly. This is incorporated in the concept of Extended Producer Responsibility (EPR). (Edge, 2010)

HOW DOES APPLE DEAL WITH IT?

Apple has undergone a small revolution in their policy. Ever since Greenpeace and other environmental organisations, targeted them publicly in 2005, Apple has become more open about its policy. In 2007, they published a special section on their website devoted to their environmental and social responsibility, with an accompanying letter from CEO Steve Jobs. In this letter he addresses the removal of toxic chemicals (e.g. lead, cadmium, arsenic, etc.), the recycling of their e-waste and the future focus on energy efficiency. He noted that disclosing their future plans and roadmaps was not in the nature of Apple, and was reason for not previously disclosing their policy (Jobs, 2007). The more transparent communication caused the loud criticism to largely fade away (Ogg, 2010).

VIEWS FROM KBC

Lets start with an overview of the rating by CSR-agencies. First well take a look at the environmental score attributed by KBC (2010): Apple received an environmental score of 36%, with following sub scores: policy: D, systems: B, Reporting: E, performance: C, initiatives: C, eco-efficient products: B and with major environmental controversies. Ive analysed the database from KBC and found that Apple was in the bottom 25th percentile, as you can see in Graph 1 below. This graph gives the observed distribution of the sector Apple is in. According to KBC, Apple is thus scoring pretty badly, especially compared to the sector mean score of 49,8%. However, most of the bad points are for the communication and for policy what cannot automatically be seen as bad environmental behaviour. The other points are all average to the sector (Cs) and even better than average

ENVIRONMENTAL ISSUES IN TECHNOLOGY FIRMS: A CASE STUDY: APPLE INC. 1

(B). I interpret this as KBC is telling Apple to be more aware and communicate this awareness externally. As KBC doesnt specify further details, I cannot attribute the scores to one of the phases.

KBC's Environmental scores for "Hardware & Telecom"

10% Frequency 8% 6% 4% 2% 0% 2% 0% 0% 0% 0% 5% 10% 10% 8% 8% 8% 6% 6% 100% 80% 60% 40% 20% 0% Cummulative frequency 12%

Apple

11%

11%

120%

8% 8%

score Frequency

Cummulative frequency

Source data: KBC

GRAPH 1 KBC'S ENVIRONMENTAL SCORES

VIEWS FROM RANK A BRAND

Rankabrand.nl (2010) tells us almost the same story: Apple gets 5 out of 12 for environment, scoring on Energy Star approved products and publishing its GHG-emissions. They lost points by not setting a goal for reducing GHGs by 2050 or 2020 or even 2012, nor has their GHG-footprint been reduced the last 5 years by 10%. At least, Apple is not communicating this information, resulting in a question mark rather than a negative cross mark. The company again scores points for their PVC and BFR-free products and the free recollection of obsolete hardware for recycling. It received question marks for banning other chemicals or plans to do so and also for not using certain amounts of recycled plastic. They received a negative cross mark for not incorporating the principle of being responsible for the entire lifetime of the product. We can make the same conclusion: Apple should become more aware of the impact and communicate this awareness as well as their plans.

VIEWS FROM GREENPEACE

The last scores I will assess, are those from Greenpeace (2010b). Greenpeace publishes a Guide to greener electronics, which give a very detailed situation. Greenpeace is the only rating agency that updates its ratings four times a year and keeps the older reports available. They also give an elaborate scoring card and explain why the company receives the score. Up till March 2008, they looked at amounts recycled, chemicals management, individual producer responsibility, information to individual customers, precautionary principle1 (and support for revision of RoHS2 Directive), PVC-free and/or BFR-free models, timeline for BFR phase out, timeline for PVC phase out and voluntary take back. Later, they added timeline for additional substances phase out, use of recycled plastic content, Global GHG emissions reduction support, carbon footprint disclosure, own GHG emissions reduction commitment, amounts of renewable energy used and energy efficiency of new models. The expansion of criteria had an overall lowering of the scores. In the following paragraphs, I will try to summarize al findings of this report. In Graph 2 below, you see Apples history for their Greenpeace rating in comparison to the average rating. Also a spread measure was incorporated, as is the difference of Apple against the average score. As we can see, Apple starts of in the lower areas of the guide, but was fast to improve its results after the media attention of the activists campaign (Greenpeace, 2010a). We also see that since then Apple hasnt done much to improve their score radically.

2 ENVIRONMENTAL ISSUES IN TECHNOLOGY FIRMS: A CASE STUDY: APPLE INC.

Greenpeace scores
10 8 6 Score 4 2 0 -2 -4

Apple

Average

AVG+ 1*St.Dev

AVG-1*St.Dev

Difference

Source data: Greenpeace

GRAPH 2 EVOLUTION IN GREENPEACE SCORES

When we look at the details of Apples most recent score, we again see the same image. They score maximum points, 3 out of 3, on the timeline and removal of PVC and BFR in their products, when only two other companies managed to do so. (Greenpeace, 2010c) They were attributed 2 out of 3 for the precautionary principle, encouraging Apple to take a public position on RoHS 2.0. The same score was given for voluntary take-back of obsolete products, providing information about take-backs for individuals, reporting about their recycling efforts, the companys carbon footprint and the energy efficiency of the new models. Comments for these criteria were the exclusion of some countries where Apple sells only 5% of their products and the lack of a detailed breakdown of the recycled products. Further, they need to support their own claims about their carbon footprint with an audit by external sources. (Greenpeace, 2010c) Only 1 out of 3 was attained for chemicals management and own commitments to reduce own direct GHG emissions. Apple specifies how it is planning to eliminate and has eliminated lot of chemicals in their product, but doesnt give information about their communications with their suppliers. Positive for Apple is that they give detailed reports per product on their website about their GHG emissions (and also many other aspects). Although it discloses this information, Apple does not disclose information about the goals it sets when designing its products or for future products. (Greenpeace, 2010c) Apple received no points for their timeline to phase out additional substances, support individual producer responsibility (IPR), use of recycled plastic, support for global mandatory reductions of GHG emissions and for the amount of renewable energy used. When communicating Apple no longer mentions Antimony or Beryllium as substances to eliminate or give specific timelines for other substances. Apple also no longer talks about their IPR point of view and thus not taking responsibility for the end-of-life of their products, nor do they mention anything about the usage of recycled plastics. Communication of renewable energy is also not up to standards according to Greenpeace. As for the GHG emissions, Apple hasnt taken a public stance on it, but it has left the chamber of commerce because they felt the chamber did not want to try to regulate emissions. (Greenpeace, 2010c) Greenpeace gives a very clear image of Apples current state on environmental responsibility. I can conclude that Apple did make a lot of progress in the past couple of years, ever since it changed its policy (Jobs, 2007). But they are still not a leading force in the sector, like CEO Steve Jobs would like you to believe. Most of the points lost are attributed to bad communications and for not taking a stance. We can either conclude that the company has a lot to hide and doesnt want to give up the advantage of not having to take these topics into account, or that the company still hasnt really incorporated its new policy into their genes.

ENVIRONMENTAL ISSUES IN TECHNOLOGY FIRMS: A CASE STUDY: APPLE INC. 3

VIEWS FROM MYSELF

Apple only communicates through their website about their environmental engagement. It is relatively easy to find the environmental section on it (apple.com/environment). There we are greeted with, according to Apple, their Total [Carbon] Footprint, existing out of manufacturing, transportation, product use, recycling and facilities. On the spot, we recognize our 3-tier mind-set: Conception (facilities and product use), Supply Chain (manufacturing and transportation) and Reprocessing (recycling). Its a shame Apple at first sight seems to narrow the environment to carbon emissions. But when clarifying the steps, they do mention the toxins, material use, durable designs (e.g. longer lived batteries), etc. and provide links to more elaborating pages. (Apple Inc., 2010a) Apple offers for each product a report stating energy efficiency levels, material use, toxins elimination, recycling, etc. They do the same for their facilities and also include water usage, transportation means of their employees, etc. Apple also offers a direct link to send in your old electronic device and encourages it by giving a gift cheque. Another page explains the energy efficiency of their products; stating that their products actively manage their power, have efficient power supplies and components. Another page gives an overview of Apples history on the topic. (Apple Inc., 2010a) Although I cannot critically interpret all of the information on the website, I feel that Apple is making an effort, albeit somewhat marketed for good advertising. Which brings us to the how and why Apple is doing this, and why they have changed their policy. Apple is trying to report on a global basis (Molderez, 2010a), not through a triple bottom line but by announcing their global footprint. They have taken into account several indicators of the Global Reporting Initiative (GRI) in their reports (Apple Inc., 2010b). But when analysing these reports, we see that Apple has not been verified by the GRI nor have they specifically mentioned the GRI-categories and are thus not up to standard. Even though the execution of the global reporting is not perfect, I feel that the basis is implemented for a good reporting system. Reporting is relatively new for Apple, as already said in the first paragraph of this section. The reason why they have changed their policy is because of an attack of the e-waste network (a global network of activists), according to Edge (2010). She suggests that the electronics industry was the ideal target: Factors, such as the competitiveness of the electronics industry, the small number of large manufacturers, and its global scope, made the industry an appealing target for the e-waste network. (Edge, 2010, p. 16) Because of corporate brand and reputation, the targeted corporations were willing to cooperate. This is why Apple since then probably changed its policy. This is what already happened, but how can Apple improve in the future? Greenpeace (2010c) has already given many aspects on which Apple can improve. But this is more or less issue related. Globally, Apple can reorganise its supply chain, so that even the supply chain would become more environmentally friendly. According to Rosen, Bercovitz and Beckman (2001), the ideal way to do this is to internalize the gain of becoming more environmentally friendly to the suppliers and manufacturers in the supply chain. Another additional point of critique I can produce, is that Apple is not a good environmental corporate citizen according to the theory of Carroll (1991) explained by Molderez (2010b). It hasnt contributed to the community on an external basis, above what is ethically obligated. Perhaps Apple should start some projects to rectify this and become a good corporate citizen.

4 ENVIRONMENTAL ISSUES IN TECHNOLOGY FIRMS: A CASE STUDY: APPLE INC.

CONCLUSION
From the previous ratings we can draw up a conclusion where Apple stands in our three-step mindset of conception, supply chain and reprocessing.

CONCEPTION
There are two major issues involved in designing an electronic product: toxins and energy efficiency. This is where apple is right now: Toxins: Together with two other companies, they are to only one who have eliminated PVC en BFRs in their products in the Greenpeace guide. (Greenpeace, 2010c) They are lagging behind on communicating their progress and goals eliminating other toxins. Energy efficiency: Apple designs energy efficient computers, as they all receive the new energy star ratings and even exceed them.

As for the conception, we can say that Apple is no longer lagging behind of the industry, but they are not leading the industry either.

SUPPLY CHAIN
Not a lot of information is released on this subject. Apple only discloses the carbon footprint of manufacturing and transport. I feel a lot more should be done: goals need to be set to where they want to be in 1, 2, 5 and 10 years. They idea was proposed that the benefits of being more environmentally friendly should be shared with the manufacturers.

REPROCESSING
On this subject Apple is on par with the industry. They take back their old products but have abandoned the concept of individual product responsibility (IPR). This makes them no longer responsible for the disposal of their old products, which I find a grave deterioration. They only will be responsible for the products that are returned to them (which I hope they will continue to take), but not for other products that will end up on a scrapyard. In a whole I can say that Apple has improved significantly since the action of the e-waste network. Although it seems Apple motivations are brand-oriented, the policy of the company has bettered for the most part. I have noticed that the company is ahead with realisations but is lacking in communicating and forming goals. As a result, a lot can still be improved. The most important element is a structured GRI-reporting system to completely inform their stakeholders.

ENVIRONMENTAL ISSUES IN TECHNOLOGY FIRMS: A CASE STUDY: APPLE INC. 5

WORKS CITED
Apple Inc. (2010b). Apple and the environment, GRI index. Retrieved November 17, 2010 from Apple: http://www.apple.com/environment/reports/gri-index.html Apple Inc. (2010a). The story behind Apple's footprint. Retrieved November 10, 2010 from Apple: http://www.apple.com/environment Edge, J. (2010). Environmental Sustainability and the Electronics Industry: Corporate Responsiveness to Activist Campaigns against Electronic Waste. Paper presented at: Canadian Political Science Association Annual Conference Concordia University, Montreal. Hamilton, Ontario: Department of Political Science, McMaster University. Greenpeace. (2010a). Eliminating toxic chemicals. Retrieved November 16, 2010 from Greenpeace: http://www.greenpeace.org/international/en/campaigns/toxics/ Greenpeace. (2010c, October). Guide to greener electronics - version 16: October 2010. Retrieved November 10, 2010 from Greenpeace International: http://www.greenpeace.org/international/Global/international/publications/toxics/2010/version16/Ranking%20t ables%20Oct%202010-All%20companies.pdf Greenpeace. (2010b, October). Guide to greener electronics. Retrieved November 10, 2010 from Greenpeace International: http://www.greenpeace.org/international/campaigns/toxics/electronics/ Greenpeace. (2004, July 2). The Precautionary Principle. Retrieved November 10, 2010 from Greenpeace International: http://www.greenpeace.org/international/campaigns/trade-and-the-environment/theprecautionary-principle/ Jobs, S. (2007, May). A greener Apple. http://www.apple.com/hotnews/agreenerapple/ Retrieved November 16, 2010 from Apple:

KBC. (2010). Maatschappelijk verantwoord beleggen. Retrieved November 10, 2010 from KBC Bank & Verzekeringen: https://www.kbc.be/IPA/D9e01/~N/~KBC/~BZMPHG4/BZKCO73/BZKCO75/BZKCO7O/BZMKO10 Molderez, I. (2010a). Theme 5: Measuring CSR. Course on Corporate Social Responsibility. Brussels: Hogeschool Universiteit Brussel. Molderez, I. (2010b). Theme 7: CSR and philantropy. Course Corporate Social Responsibility. Brussels: Hogeschool Universiteit Brussel. Ogg, E. (2010, February 25). Will Apple satisfy its environmental critics? - Circuit Breaker. Retrieved November 19, 2010 from CNet News: http://news.cnet.com/8301-31021_3-10459404-260.html Rank a Brand. (2010, October 20). Apple scoort 8 uit 18 bij Rank a Brand. Retrieved November 17, 2010 from Rank a Brand: http://www.rankabrand.nl/Apple Rosen, C. M., Bercovitz, J., & Beckman, S. (2001). Environmental Supply-Chain Management in the Computer Industry: A Transaction Cost Economics Perspective. Journal of industrial ecology , Vol4 (4), 83-103.

ENDNOTES
Precautionary principle: It means that when (on the basis of available evidence) an activity may harm human health or the environment, a cautious approach should be taken in advance - even if the full extent of harm has not yet been fully established scientifically. It recognises that such proof of harm may never be possible, at least until it is too late to avoid or reverse the damage done. (Greenpeace, 2004)
1

6 ENVIRONMENTAL ISSUES IN TECHNOLOGY FIRMS: A CASE STUDY: APPLE INC.

RoHS: Restriction of Hazardous Substances

ENVIRONMENTAL ISSUES IN TECHNOLOGY FIRMS: A CASE STUDY: APPLE INC. 7