Apple Continues Its Leadership on Climate Change Issues with Candid Self-Assessment of Risks and Opportunities

Apple Park Aerial View Surrounded By Trees Credit: Apple
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Apple has established a reputation as a corporate leader in environmental stewardship, however in a new report released today the company has also candidly admitted that there are ways that climate change may also provide revenue opportunities for the company, by not only increasing consumer demand for environmentally responsible products in general, but also demand for the iPhone and other mobile computing devices to provide safety in an era of increasingly severe weather events.

CDP, a non-profit environmental analyst group based in the U.K., recently sent out a questionnaire to a number of major corporations, including Apple, asking them to provide extensive details on their environmental policies and strategies, as well as identifying both risks and opportunities that they envision as a result of climate change. The report specifically asked companies to provide their own timelines for short-, medium-, and long-term horizons, and describe their processes and timelines for identifying, assessing, and managing climate-related issues, risks, and opportunities. Additional questions asked about business strategies around environmental responsibility, targets and performance, emissions data, verification methods, and more.

Apple provided an extremely detailed response, reiterating many of the environmental policies and strategies that the company has been making public for the last several years in its public Environmental Responsibility Reports. In answering the more pointed questions about risks and opportunities, however, Apple identified three specific risks and three specific opportunities related to climate change that could “have a substantive financial or strategic impact” on Apple’s business. For each risk and opportunity, Apple provided a brief description, along with identifying the type of risk/opportunity, the time horizon, the likelihood and magnitude of the impact, and financials on the cost or benefit of the impact, and the amount of money that it would cost Apple to either manage the risk or realize the opportunity.

The risks Apple identified included increased energy costs due to carbon taxes and regulatory changes that could result in abrupt and unexpected shifts in electricity prices that would affect Apple’s major U.S. data centers; decreased production capacity due to changes in weather patterns that could impact the supply chain, thereby reducing revenue, and a transitional risk that could result in Apple’s loss of reputation in its handling of environmental issues, leading to a lack of investor and consumer confidence in the company, although Apple identified this last risk as being long-term and very unlikely, however.

In identifying opportunities, Apple naturally touted its own track record at producing more environmentally responsible products, noting that the company is already in a position to benefit from increasing government regulation on the use of energy-efficient products, with more of its product line already compliant with new efficiency laws that are on the horizon, giving it an edge over its competitors, and citing $2.3 billion in potential revenue from this opportunity alone. Changing consumer preferences for more environmentally friendly products was identified as a separate $2.3 billion opportunity, with Apple suggesting that even in the absence of government regulation, many consumers still want to make environmentally responsible purchases, and that even those who are not may still be drawn to more energy-efficient devices, regardless of their personal values, simply as a result of increasing electricity prices. In both cases, however, a $2.3 billion increase in sales would only represent a drop in the bucket to a company that reported $229.2 billion in net sales in 2017.

One interesting opportunity that Apple did identify, however, was a shift in consumer preferences toward mobile devices as a result of severe weather events, which are becoming more frequent as a result of climate change. In outlining this opportunity, which Apple estimates is worth only $920 million, the company explains how an iPhone can serve as a flashlight or siren, and provide first-aid instructions, and adds how Apple has been working to implement emergency features such as SOS and “Find My Friends” to do as much as possible to lessen the impact of natural disasters such as hurricanes and superstorms, citing a trend that the company has already seen toward an increasing reliance on mobile devices in emergency situations over the past few years.

While Apple’s responses to the CDP questionnaire were detailed and candid in its self-assessment of its environmental position, Apple remains one of the top environmental citizens in the corporate community, and CDP has notably also released its A List alongside this series of reports, naming over 140 corporations as “pioneers for action on climate change, water and deforestation” and noting that Apple remains among the leaders — one of the only tech companies on a list that also includes Johnson & Johnson, L’Oréal, Mitsubishi Electric, and Nestle.

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