Apple: Reducing emissions, one target at a time
How one company has dedicated itself to the long-term vision and began reducing emissions: a focus on facilities and manufacturing challenges
“Climate change is one of the great challenges of our time, and the time for action is now…The transition to a new green economy requires innovation, ambition and purpose. We believe passionately in leaving the world better than we found it and hope that many other suppliers, partners and other companies join us in this important effort.” Tim Cook, CEO of Apple
Apple is a publicly traded consumer electronics, software, and online services company. Valued at over $580B[1] with over $215B in revenue for FY16[2], Apple has dedicated itself to cutting carbon emissions.
Apple & Climate Change
While still a debated topic, climate change is a serious problem facing the future of the earth. Amongst several issues, greenhouse gas (GHG) emissions have increased dramatically and resulted in a drastic increase of average global surface temperatures of 0.9˚C (Exhibit 1).
Exhibit 1 Annual change in global surface temperatures from 1880-2016.[3]
In an effort to do its part in stopping climate change, in 2013, Apple appointed Lisa Jackson, former head of the Environmental Protection Agency, to lead its efforts to minimize its impact on the environment. As of 2015, Jackson is the VP for Environment, Policy, and Social Initiatives.[4]
Under Jackson and Cook’s leadership, Apple has focused on 5 main areas to minimize its carbon footprint: manufacturing, product use, facilities, transportation, and recycling.[5] Exhibit 2 provides the breakdown of each area in the entire carbon footprint.
Exhibit 2 Data from Apple’s Environmental Responsibility Report 2016.[6]
As of 2015, Apple reported 38,400,000 metric tons of GHG emissions. Since 2011, Apple has markedly reduced CO2e per product from 131.2 to 114.2kg (Exhibit 3). Apple has made the most progress on manufacturing and facilities, which is what we will focus on here.
Exhibit 3 from https://www.apple.com/environment/pdf/Apple_Environmental_Responsibility_Report_2016.pdf, page 5.
2011-2016
Manufacturing
At 77% of its total carbon footprint, manufacturing is a large focus point for Apple. Jackson’s team identified two main areas to reduce emissions from manufacturing: electricity used in manufacturing and raw materials production.
Where does electricity go toward during manufacturing? Raw materials processing, product assembly, and parts manufacturing, amongst others. Electricity use in manufacturing accounts for over 60% of manufacturing emissions and is the biggest source of Apple’s carbon footprint.[7] After 13 energy audits in its facilities in China, Taiwan, and Japan during 2014, Apple identified 244 million kilowatt-hours of potential reductions opportunity. Of these, its supplier and facilities have already reduced over 13,800 metric tons of CO2 equivalents.
To offset manufacturing emissions and cover the energy used by Apple products, Apple plans to build 200 megawatts of solar projects in China. One of its key suppliers, Foxconn, is installing 400 megawatts of solar projects in the Henan Province by 2018.[8] In addition, Apple is encouraging its other global suppliers to install more than 4 gigawatts of new clean energy. In total, Apple management estimates that these projects will avoid over 30 million metric tons of carbon pollution.[9]
Until recently, Apple had used aluminum that was produced using fossil fuels. Now they’ve switched to aluminum smelted using hydroelectricity and changed the manufacturing process to reincorporate scrap aluminum. Apple reports that this change has resulted in an enclosure whose footprint is half compared to the previous iPhone generation.[10]
Facilities
Now at 1% of total carbon footprint, facilities comprise a small slice of Apple’s carbon footprint pie. Since FY2011, Apple reports that carbon emissions from its facilities have decreased by 64%, avoiding over 1 million metric tons of CO2e.[11] As of January 2016, 93% of Apple’s global facilities, including data centers, corporate offices, and retail store, are run using renewable energy for electricity.
Looking Ahead
For the third year in a row in 2016, Apple made CPD’s A List[12] (performance score greater than 85[13]). In July 2015, Apple, along with others like Google, Alcoa, and Goldman Sachs, pledged $140B to further reduce carbon emissions and invest in at least 1,600 megawatts of clean energy efforts.[14] This was a concerted part of Obama’s American Business Act on Climate Pledge, that aimed to reduce GHG emissions in the U.S. by 26-28% by 2025.[15]
These goodwill pledges were shortly followed by a successful COP21 in Paris in December 2015 that resulted in the adoption of The Paris Agreement[16]: all signatories pledged to keep global temperature increase well below 2˚C this century to ultimately limit the temperature increase even further to 1.5˚C.[17] In 2018, nations party to the Agreement are to evaluate their efforts and progress towards the goals set in Paris. In light of this renewed global commitment to preserving our environment and stopping climate change, Apple has made many strides, especially in its most recent commitments to solar energy installations, but still has a long way to go. Next on its agenda should be innovative methods to reduce its paper use, especially in packaging, and complete elimination of the toxic substances in its devices, along with specific care taken to reengineer and optimize its recycling processes.[18]
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[1]https://ycharts.com/companies/AAPL/market_cap
[2]http://images.apple.com/newsroom/pdfs/Q4FY16ConsolidatedFinancialStatements.pdf
[3] NOAA National Centers for Environmental information, Climate at a Glance: Global Time Series, published October 2016, retrieved on November 4, 2016 from http://www.ncdc.noaa.gov/cag/
[4] https://www.washingtonpost.com/news/the-switch/wp/2015/06/23/apples-lisa-jackson-to-lead-all-of-apples-social-policy-initiatives/
[5]https://www.apple.com/environment/pdf/Apple_Environmental_Responsibility_Report_2016.pdf
[6]https://www.apple.com/environment/pdf/Apple_Environmental_Responsibility_Report_2016.pdf
[7]https://www.apple.com/environment/pdf/Apple_Environmental_Responsibility_Report_2016.pdf
[8]http://www.cnbc.com/2015/10/22/apple-china-suppliers-green-amid-climate-change-criticism.html
[9]https://www.apple.com/environment/pdf/Apple_Environmental_Responsibility_Report_2016.pdf
[10]https://www.apple.com/environment/pdf/Apple_Environmental_Responsibility_Report_2016.pdf
[11]https://www.apple.com/environment/pdf/Apple_Environmental_Responsibility_Report_2016.pdf
[12]https://b8f65cb373b1b7b15feb-c70d8ead6ced550b4d987d7c03fcdd1d.ssl.cf3.rackcdn.com/cms/reports/documents/000/001/228/original/CDP_Climate_Change_Report_2016_Web_Pages.pdf?1477406073
[13]http://www.environmentalleader.com/2015/11/04/apple-microsoft-google-make-cdps-2015-climate-a-list/
[14] http://www.wsj.com/articles/companies-to-pledge-140-billion-in-efforts-to-cut-carbon-emissions-1437950378
[15] https://www.greenbiz.com/article/apple-gm-google-and-140-billion-pledge-combat-climate-change
[16] http://unfccc.int/resource/docs/2015/cop21/eng/l09.pdf
[17] http://unfccc.int/paris_agreement/items/9485.php
[18] http://www.huffingtonpost.com/2015/04/20/apple-climate-change_n_7099918.html
I agree that Apple is leading the way in reducing its carbon footprint, especially in developing countries where their suppliers are located. I think it’s fascinating that you mentioned Apple’s plans to build 200 megawatts of solar projects in China, which could potentially reduce 30 million metric tons of carbon pollution. I wonder what Apple will do to regulate those operations in China? Due to the lack of environmental regulations in China, it might be hard for Chinese operations to make the switch. Apple needs to be very clear that the factory will have to use solar energy rather than fuel, and maybe even get the government’s support. But if Apple is successful, it will really benefit the local pollution in China, in addition to being environmentally sustainable.
I agree with Katherine on this, and to broaden it a bit further, Apple has had issues with other suppliers not complying with environmentally friendly standards. Environmental activists accused Foxconn in August 2013 of dumping factory chemicals into nearby rivers, shortly after Pegatron, a Taiwanese manufacturer of older iPhone models and iPad minis, was criticized for similar issues [1]. It calls into question how much influence Apple, despite being a behemoth brand with a lot of leverage, has over its supply chain, especially when vendors are operating in developing countries.
[1] Kaiser, Tiffany, “Apple’s Chinese Suppliers in Trouble for Environmental Pollution,” August 5, 2013, http://www.dailytech.com/Apples+Chinese+Suppliers+in+Trouble+for+Environmental+Pollution/article33103.htm, accessed November 2016.
A few years ago, Apple’s CEO Tim Cook publicly declared to investors caring only about profits to “get out of the stock.” This was in reaction to a dissident comment about Apple’s new strategy regarding renewable energy, that you accurately outlined.
However, Apple is not investing in solar energy merely as a gift to humanity. At the end of the day, Apple is doing it because it’s still a good business deal. As the company officially declared, it is expected that they would make “very significant savings”.
To that regard, last summer, Apple has been allowed by US federal regulators to sell excess electricity generated by three of its major solar projects. This could suggest that Apple has bigger ambitions than expected. Imagine, a world where Apple provides electricity to regular individuals, who can pay their bills in the same place they check out the latest iPhone.
If history serves as any example, Apple always had a card up its sleeve. I am curious to see this one through. Whatever the outcome, however, one needs to recognize that Apple just demonstrated to all the pundits that it can be achieve both purpose and profit at the same time.
This was a very interesting read! Although I think Apple’s efforts are noteworthy do you think the company should play a bigger role in developing clean technologies? Although clean tech is far from Apple’s core expertise the company is an innovation powerhouse. Given the challenges ahead, simply adding solar panels and improving manufacturing processes will not be enough. I would argue that companies like Apple can lead the way to generate true alternatives to fossil fuels.
Great article. I think it is great that Apple is putting more of a focus on reducing emissions by focusing on operations at the manufacturing plant and the production of raw materials, but I also know that a large part of the raw materials are extracted by Congolese people under harsh working conditions (http://www.dailymail.co.uk/news/article-3280872/iPhone-mineral-miners-Africa-use-bare-hands-coltan.html). I applaud the company for their efforts to reduce emissions, but I hope that the decreasing emissions initiative does not have other unintended consequences, such as reductions in raw material cost by continuing to use minerals extracted by individuals with terrible working conditions.
Furthermore, I would be extremely interested to find out how the company’s profit margin are impacted by the financial pledges and the commitment to invest in carbon emission reduction efforts. Must the company cut expenses elsewhere in the business?
Thanks for the interesting read – your extensive use of graphics really helped me understand what’s going on with Apple! I agree with you that just using green energy is not enough. Interestingly, Apple has built a robot that can precisely breakdown and recycle old iPhone6 models (http://mashable.com/2016/03/21/apple-liam-recycling-robot/#noplAgIA5kq3). The problem is there are currently only ~30 robots active and I believe they only recycle iPhone6 models. I would love to see Apple expand this robot, while also encouraging customers to turn in all old products for recycling. Even better, it would be great to see Apple become a place that allows customers to drop off any time of electronic for recycling, not just old Apple products.
Oh how I love Apple. Their new headquarters is a model for all. What’s really amazing is that they cared about the materials that went into their products long before anyone else in the industry.
Every time Steve Jobs released a new product, he would show off an “Environmental Checklist” https://cnet2.cbsistatic.com/img/6wMuwZYUaN6t_ZFV4RPl6tZI3vs=/570×0/2008/10/15/65782a57-f4d6-11e2-8c7c-d4ae52e62bcc/Applegreen2.jpg
He would highlight things like arsenic-free, mercury-free, recyclability, and smaller packaging.
Apple’s been at the forefront of environmentalism for years, and it’s really proven itself as a leader of the industry.
It is contrasting to see at how innovative and active those companies could be in product development and creating profitable cash flows while lagging behind in sustainability despite sitting on tremendeous amount of cash. My expectations from Apple in terms of sustainability was much higher and more disruptive as in the case of their core business. However, I feel that those cool and giant companies are not that agressive in investing in disruptive sustainable solutions as they do for disruptive technologies. Most of the efforts are reactive; slow and reputation friendly. Especially Apple has a very controversial history with sustainability efforts due to working with low cost suppliers.
On the other side. it is promising to see those companies taking some serious steps to create real solutions to one of the biggest challenges of our planet. Their innovative competence and spirit is my only hope to cope with the climate change challenge.
Great article! Like Zach, oh how I love Apple. What caught my attention was the initial screenshot of the Apple headquarters and the ending paragraphs about their efforts to improve sustainability at facilities (notably their corporate headquarters). One thing that’s always surprised me about the tech industry in Silicon Valley is it’s embrace of the suburban American landscape, and in particular the way it which it continues to double down on car-centric corporate offices. I would always joke I often felt more that I lived in LA than SF when in the Bay Area, and it’s interesting to see the problem continue to exacerbate as the industry grows (driven not just by tech expansion, but also by the need for people to live further and further away in order to afford rent and housing): http://www.mercurynews.com/2016/11/02/job-boom-intensifies-traffic-and-housing-woes/
It lifts the heart to hear that Apple has seriously taken many measures to address climate change issue and foster sustainability. The company chose to both reduce consumption (recycling) and reduce carbon footprint impact on the other four core initiatives should be very successful. However, I believe Apple could push this even further in many ways. First, through its research and development, Apply could play a significant role in developing an environmentally friendly phone. One of the big issues is that when the phone died, it became very toxic and took a long time to dissolve. Second, Apple can use its scale to have supplier support in its sustainable carbon footprint reduction initiatives. Third, they should share their carbon-footprint reduction know-how to other companies. So that multiplier effect could be achieved.