This article was originally written in 2023 based on Apple’s ESG report from that year. For the most up-to-date information and analysis, please scroll down to the 2024 update section. As of 2023, the most recent Apple ESG report showed that the company had made significant efforts to become more environmentally friendly in recent years. With ambitious sustainability goals and progress towards achieving them, there was, however, in terms of the Apple ESG rating, still room for improvement. Like any company, Apple faced ESG risks that could potentially impact its business operations, reputation, and financial performance. Some of the key ESG risks that Apple faced according to our ESG data were:
The most recent Apple ESG report shows that the company has made significant efforts to become more environmentally friendly in recent years. With ambitious sustainability goals and progress towards achieving them, there is however in terms of the Apple ESG rating, there is still room for improvement. Like any company, Apple faces ESG risks that could potentially impact its business operations, reputation, and financial performance. Some of the key ESG risks that Apple faces include according to our ESG data are:
Supply chain risks
Apple’s supply chain is complex and spans multiple countries, which could expose the company to risks such as labour violations, human rights abuses, and environmental issues.
Cybersecurity risks
As a technology company, Apple is vulnerable to cybersecurity risks such as data breaches, hacking, and cyber attacks, which could compromise customer data and damage the company’s reputation.
Regulatory risks
Apple operates in highly regulated industries, and changes to regulations or policies could impact the company’s operations and financial performance. For example, changes to tax laws or privacy regulations could have a significant impact on Apple’s business.
Climate change risks
Apple is exposed to climate change risks such as extreme weather events, disruptions to its supply chain, and increasing energy costs. These risks could impact the company’s operations and financial performance.
Reputation risks
Apple’s reputation is critical to its success, and the company could face reputation risks if it is seen as engaging in unethical or irresponsible behaviour, such as labour violations or environmental damage.
Apple’s Environmental Performance
Apple’s Commitment to Reduce Waste
Apple’s report states that over 90 percent of the company’s total plastic packaging waste comes from shipping, which is why it is working towards finding new ways to reduce this waste. In addition, Apple is making efforts to reduce its overall waste through a variety of programs and initiatives.
In terms of supply chain sustainability, Apple has worked with suppliers to reduce their environmental impact (and improve working conditions) and has also made efforts to use more sustainable materials in its products, such as recycled and responsibly sourced materials.
Apple’s report states that the company has been working to expand its recycling program so that all of its packaging can be reused and recycled. Their free recycling initiative allows customers to recycle their devices for free. Meanwhile, the company also uses recycled materials in its products, such as recycled aluminum in its MacBook Air and Mac mini.
Energy Efficiency and Renewables
Apples states that it has made its products more energy-efficient, reducing their environmental impact. For example, the company has developed more energy-efficient processors, displays, and batteries, and has implemented power-saving features in its software. They have also been exploring ways to reduce the amount of energy used to send and store products.
For example, the company has been working on ways to store products in their data centers with less power consumption. The company has been investing in new technologies that help reduce its power consumption as well as exploring new ways to expand its operations so that it can become more energy efficient.
In terms of renewable energy, Apple has committed to 100% renewable energy for its operations and has made significant investments in renewable energy projects. The company’s data centers, offices, and retail stores are powered by renewable energy, and Apple has also invested in large-scale solar and wind projects.
Apple’s Smart City Initiative
Apple’s report discusses how the company is using technology to make cities smarter, which is part of its Smart City Initiative. As part of this, the company has been working to improve the smart city systems it uses, including developing new software that can help manage traffic, reduce the risk of cyber attacks, and support public safety.
In addition, the company has been working to improve the quality of life for residents, such as creating new solutions for waste management and public transportation. Apple has also been exploring how it can use technology to help cities improve their overall resiliency. This includes finding ways to help cities more quickly respond to natural disasters as well as help them better manage their daily operations, such as public transportation.
Apple’s Efforts to Improve Air Quality
Apple’s report discusses how the company is working to improve air quality through several initiatives. The company says that it is making progress towards its net zero targets and goal of reducing carbon emissions at its data centers. The company also says that it is investing in renewable energy to help reduce its environmental impact across the globe.
Apple is also working to improve air quality through its supply chain and using technology to reduce its impact on the environment. Some of these initiatives include working to minimize the impact of packaging, using machine learning to reduce the amount of water used to ship products, and using artificial intelligence to optimize power consumption.
Apple’s Focus on Water Conservation and Product Reuse
Apple is working to conserve water through a variety of initiatives. The company is exploring ways to reduce its overall water consumption, while also looking for ways to reuse water. Some of the ways that Apple is reducing water consumption include reducing the intensity of its cooler operations, exploring new ways to manage water use, and reducing the amount of water used in product manufacture. Apple has also been exploring ways to reuse and recycle water. Some of these efforts include creating fertilizer for crops on Apple’s facilities and delivering drinking water to customers.
Apple’s Strategy for Landscape and Biodiversity Protection
Apple has invested in research to better understand the environmental impacts of its products and operations. For example, the company has conducted research on the impact of its supply chain on biodiversity, and has developed tools to help its suppliers identify and address environmental risks.
Apple’s report discusses how Apple is working to promote landscape protection and support biodiversity. This includes providing planting instructions for employees, creating new tools to help promote the planting of trees and grasses, and providing support for local conservation groups. For example, the company has worked with the World Wildlife Fund to protect forests in China and with Conservation International to protect mangrove forests in Colombia. Apple has also made donations to the Conservation Fund and the National Park Foundation.
Apple has committed to sourcing materials for its products from responsibly managed forests, which helps protect biodiversity. The company also works to eliminate materials from high-risk areas, such as those with high rates of deforestation. In addition, Apple has developed a supplier code of conduct that includes environmental standards and requires suppliers to follow responsible sourcing practices.
Apple’s Corporate Governance and Behaviour Performance
While Apple is generally well-regarded for its corporate governance and behaviour, the company has faced some criticism in these areas over the years which has muddied its ESG reputation in this our and is why our Apple ESG rating within this field is comparatively low. Some of the criticisms leveled against Apple include:
Tax avoidance
Apple has been accused of using various tax avoidance strategies to minimize its tax liability. This has led to criticism from some quarters that the company is not paying its fair share of taxes.
Labour practices
Apple has faced criticism for its labour practices in its supply chain. Specifically, the company has been accused of exploiting workers in its factories in China and elsewhere, and of failing to ensure safe working conditions and fair wages for workers.
Environmental impact
While Apple has made commitments to reduce its environmental footprint, some critics argue that the company has not done enough to address its impact on the environment. For example, Apple has been criticized for not doing enough to promote recycling of its products, and for not using more recycled materials in its products.
Board diversity
Apple has faced criticism for its lack of board diversity, with some critics arguing that the company needs to do more to promote diversity and inclusion at the highest levels of the organization.
Overall, while Apple has generally been praised for its corporate governance and behaviour, the company has faced some valid criticisms in these areas, and there is room for improvement in some areas.
2024 UPDATE
As we make our way through 2024, Apple’s latest ESG report demonstrates significant strides in environmental sustainability, while also highlighting areas for continued improvement. This update reflects on Apple’s progress and the ongoing ESG risks and challenges the company faces.
Environmental initiatives
- Waste reduction: Apple has made substantial progress in reducing plastic packaging waste, with over 95% of its packaging now made from recycled or renewable materials. The company’s free recycling program has expanded globally, significantly increasing the recycling rates of Apple products.
- Supply chain sustainability: Apple has intensified efforts to reduce the environmental impact of its supply chain. Over 300 of its suppliers now use renewable energy, and the company has implemented stricter environmental standards for all tiers of its supply chain.
- Energy efficiency and renewables: Apple has achieved its goal of 100% renewable energy for its operations and has made significant progress towards its 2030 carbon neutrality goal for its entire supply chain and product lifecycle. The company has also launched innovative energy storage solutions to support its renewable energy initiatives.
- Water conservation: Apple has updated its water strategy to focus on replenishment and reuse as part of this plans to be carbon neutral by 2030.
- Biodiversity protection: Apple has expanded its Restore Fund, a project that it first launched in 2021 with a $200 million investment. Through the Restore Fund, Apple backs new financially-viable initiatives to restore forest woodland areas, which removes carbon from the atmosphere.
ESG risks and challenges
Despite these advancements, Apple continues to face several ESG risks in 2024:
- Supply chain risks: While improvements have been made, Apple’s complex global supply chain still poses risks related to labour practices, human rights, and environmental standards. The company has increased supply chain audits and transparency, but challenges persist.
- Cybersecurity: As cyber threats evolve, Apple faces ongoing risks related to data security and privacy. The company has strengthened its cybersecurity measures but remains a high-profile target for cyberattacks.
- Regulatory compliance: Apple continues to navigate a complex regulatory landscape, particularly regarding antitrust issues, data privacy, and tax practices. They are also one of the worst perceived companies for political risk according to our data. The company has made efforts to improve tax transparency, but still faces scrutiny in some jurisdictions.
- Climate change: While Apple has made significant progress in reducing its carbon footprint, it remains vulnerable to climate-related risks, including supply chain disruptions and increased operational costs due to extreme weather events.
- Reputation management: Apple’s high profile makes it susceptible to reputational and adverse ESG events. The company has improved its stakeholder engagement and transparency, but controversies around labor practices in its supply chain and product repairability continue to pose challenges.
Corporate governance and behaviour
Apple has made notable improvements in its corporate governance:
- Board diversity: The company has significantly increased the diversity of its board, with over 50% of board members now from underrepresented groups.
- Tax practices: Apple has increased its global effective tax rate and improved tax transparency, though some critics argue for further improvements.
- Labour practices: Stricter supplier codes of conduct and increased audits have led to improvements in labour conditions throughout the supply chain, but ongoing monitoring remains crucial. One such example can be found in its cutting of 14 suppliers using conflict materials.
Updated conclusion for 2024
Overall, in terms of the Apple ESG rating, there has been substantial progress, particularly in environmental sustainability and corporate governance. The company has set industry-leading standards in areas such as renewable energy use, waste reduction, and supply chain management. However, Apple continues to face significant ESG risks and challenges, particularly in areas of supply chain management, cybersecurity, and regulatory compliance.
While Apple’s ESG rating has improved, there remains room for further enhancement, especially in addressing persistent criticisms around tax practices, labor issues in the supply chain, and product lifecycle management. The company’s continued efforts to address these challenges will be crucial in maintaining its position as a leader in corporate sustainability and responsibility in the tech industry.
