MN315 – The Sustainable Enterprise

A critical analyze of the sustainability of Apple Inc.

4th of November 2013 Ms. Andrea Carroll

Amy Rose Broughall 11336566

The introduction of Sustainability Theory

Corporate Sustainability and Sustainability theory has been around for decades but has

only become a concern in recent years. Sustainability theory appears in business literature

as far back as the 1930’s. Corporate Sustainability has its roots in Corporate Social

Responsibility. Corporate Social Responsibility can be defined as “continuing

commitment by business to behave ethically and contribute to economic development

while improving the quality of life of the workforce and their families as well as of the

local community and society at large”. (Mallen, 2004)

Corporate Sustainability and Corporate Social Responsibility all essentially relate to

Sustainable Development. Sustainable development can be defined as “development that

meets the needs of the present, without compromising the ability of future generations to

meet their own needs”. (IISD, 1992). Organizations are facing increased pressure from

stakeholders to develop and maintain sustainable business practices. Corporate

Sustainability is becoming increasingly important to the success/failure of organizations.

Organizations now understand that consumers, governments and communities want

organizations to consider their environmental, social and economic impact.

Corporate Sustainability is extremely broad and extensive. Sustainability means different

things to different people, organizations and governments. However, the general

consensus points towards this issue becoming of growing concern. A survey conducted

by Accenture which targeted Chief Executive Officers for the UN Global Compact in

2010 found that 96% of CEO’s from around the world believe that sustainability should

be fully embedded into the strategy and operations of the company (Grayson, 2012).

Husted and Alllen also wrote that “ Firms that do not manage corporate sustainability

strategically may face serious economic consequences (Iarossi, 2013) and Just over 60%

of companies surveyed by KPMG in 2011 said that they currently have a working

strategy for corporate sustainability, up from just over half polled in a similar survey in

2008. (Grayson, 2012). This field is without an exact definition, yet the success or failure

of organizations today is becoming increasingly dependent on this concept.

Since 1972 and the first world summit on Human Development, there have been a

number of developments in sustainability. In 2009 at COP 15, UN climate change

conference in Copenhagen, an important shift took place in the area of sustainable

development. A number of developing countries such as Asia and China stood for the

cause that is sustainable practices and they will no longer accept the actions of Europe

and the U.S if they do not become corporately responsible.

Sustainability theory highlights the ever-changing nature of this concept. It cannot be

planned or organized. It must become embedded in culture and it involves continuous

consideration of new information and better ways of doing things.

Principles of Corporate Sustainability

“For the business enterprise, sustainable development means adopting business strategies

that meet the needs of the enterprise and its stakeholders while protecting, sustaining and

enhancing the human natural resources that will be needed in the future”. (IISD, 1992)

Sustainability should mirror the culture of the organization, matching the organizations

strategic approach to doing business. Organizations are now developing sustainability

strategies and embedding them in the organizations culture. The organization now

understands that sustainability will play a major role in their future success/failure.

Corporate Sustainability can be summed up using the Triple Bottom Line approach. The

Triple bottom line theory is Financial, Social and Environmental effects of a companies

policies and actions that determine its viability as a sustainable organization.

Social Impact: Organizations must now consider human rights, justice, security/peace,

gender equality and cultural diversity when conducting business. Consumers,

Communities and Governments are increasingly aware of mistreatment in the workplace

and this can prove detrimental to the organization.

Environmental Impact: Organizations must now consider water preservation, usage of

renewable energy, treatment of agriculture, protection of the globes biodiversity and

protection of our natural resources when producing and conducting business.

Environmental protection is critical for organizations today as stakeholders and

legislation become more concerned with global warming, rising CO2 levels and the

reduction of non-renewable resources.

Economic Impact: Organizations must ensure that they are taking the necessary measure

to remain in business. For this reason, they must consider responsible consumption,

corporate responsibility, waste management, employment, education and cost reduction.

The Triple bottom Line theory assists in highlighting the necessary steps an organization

must take in order to become sustainable. The organization can analyze its effectiveness

in relation to the three P’s Principle. The three P’s are:

• Precautionary Theory – This states that a “Lack of scientific consensus is not a

reason to postpone cost effective measures to prevent environmental damage.” –

Organizations must adhere to this and develop the necessary strategies to become

sustainable.

• Proximity Principle – which states that waste should be treated and disposed of

close to where it was created. For years, Europe and the US have exported waste

to developing countries all over the world and these countries have suffered as a

result.

• Polluter Pays theory - which states that the cost of pollution should be bared by

those who create it. Sustainability theory describes the world as a system. In the

system, irresponsible actions do not go unnoticed. Someone must pay for the

actions of polluters and corporately irresponsible organizations.

In order to embedded sustainable business practice into organizational culture, a

combination of Top-Down and Bottom – Up strategies must be evident. Employees have

to see senior management “ walk the talk”. (Grayson, 2012) The organization must

continuously remind stakeholders why sustainability is critical to the organization. The

following can assist management with embedding sustainability in the organizations

culture:

• Knowledge Management and Training.

• Stakeholder engagement.

• Measurement and reporting

• Communication.

Companies must consider external stakeholders. It is simply not enough to incorporate

sustainability in your organization alone. Organizations must consider their stakeholders

when conducting business. It is essential that the organizations stay true to their

objectives and conduct business in the most sustainable manor possible.

Environmental Sustainability practices depend on the principles of the organization.

Corporate sustainability will mean different things to different organizations. Therefore it

is critical that companies learn how to balance the trade- off between what they want to

do and what they need to do to remain financially stable in the business environment.

Apple Inc. and their Sustainability Practices

Apple Inc. is a multinational corporation that produces and markets a wide selection of

Electronic devices, Hardware and Software and a range of other consumer goods.

Founded in California, United States in 1976, Apple has grown to become one of the

worlds must successful organizations in the area of personal computing and networking.

Credited mainly to its late CEO, Steve Jobs, Apple Inc. has revolutionized the market for

personal electronics. Through a number of radicle innovations such as the iPod, iPhone

and iPad, Apple Inc. gained a first mover advantage that no other organization could

compete against.

Why Sustainability is important to Apple Inc.

As a result of the numerous difficulties occurring in the worldwide economy today, it is

becoming critical that organizations consider their sustainability. Sustainable business

practices can now be the difference between success and failure. For Apple Inc. there is a

number of reasons why sustainability is critical to this organization.

Apple Inc. gained a first mover advantage in the industry for personal computing and

electronics. Being the first organization to produce a modern day mp3 player and the first

organization to combine this with a cellular device and Internet connectivity has created a

level of prestige for Apple Inc. In order to maintain this level of Prestige, Apple Inc. must

be seen to be up-to-date and current with consumer needs and wants. Consumers are now

demanding environmentally friendly products, which are also high in quality and

competitive in prices. Apple Inc. must appear to be working with these consumer

concerns in order to maintain their level of prestige and competitive advantage.

Sustainability can create new opportunities for the organization and Apple Inc.

understands this and has used this to their advantage. In an aim to reduce packaging and

the use of harmful materials, Apple Inc. has managed to create a number personal

computing devices that are slimmer, lighter and more efficient than any of its market

competitors. The MacBook Air and New Generation iPad are prime examples of this.

Sustainability can create a wide range of opportunities from new innovative products to

increased employee development and training. This is important to Apple Inc. as the

industry becomes increasingly competitive.

Sustainability has become a growing concern in recent years. The effects of global

warming and the rise in CO2 level are becoming increasingly obvious worldwide.

Government agencies are now introducing legislation to counteract the effects of climate

change and minimize the irreparable damage. Manufacturers and Organizations are under

increased pressure to follow new legislation. Apple Inc. must adapt to the new legislation,

which effects its organization, such as the WII directive in Ireland, and create a more

sustainable strategy for conducting business.

Sustainability is critical to the Apple Inc. organization as pointed out above. This is due

to the opportunities sustainability creates, its ability to maintain competitive advantage

and the organizations reputation and the impact new legislation will have on the

organization if they do not take action.

Apple’s Policies and Procedures on Sustainability

Apple Inc. is undertaking a number of strategies and procedures to address sustainability.

The policies and procedures Apple Inc. have introduced to address sustainability can be

examined using the Triple Bottom Line Theory.

In relation to Society, Apple has adapted the following procedures in relation to

sustainability.

• Apple Inc. suppliers have to accept Apples supplier Code of Conduct. (Apple,

2013) This Code of Conduct contains rules and regulations in relation to treatment

of employees, fair and safe workplace practices and also a number of

environmental restrictions that the supplier organization must follow.

• Apple Inc. conduct onsite audits to ensure the Code of Conduct is not being

violated in any way. Apple assists and approves corrective action plans where

necessary, verify and monitor an implementation and assist in any means possible

when maintaining Code of Conduct standards. (Apple, 2013)

In terms of Environmental Sustainability, Apple Inc. have a number of policies that assist

in creating sustainable business practices.

• Apple Inc. ensures that environmental requirements are adhered to in the

production of a wide range of their products. For Example, the new MacBook Pro

meets stringent Energy Star 6.0 requirements and achieves an EPEAT Gold

rating. (Apple, 2013)

• Apple has dramatically reduced the amount of packaging used in there products.

The new Mac Pro boasts the use of 80 percent less packaging material than the

current Mac Pro. The new iPad Air is also 20 percent thinner and 28 percent

lighter than the fourth generation iPad. (Apple, 2013) Apple is continuously

developing new and innovative technologies that have increased sustainability at

heart.

• Apple Inc. has adapted a strategy to phase out harmful materials from the

production line. The new Mac Pro is PVC-free and uses recyclable materials and

features material-efficient systems and packaging designs. (Apple, 2013) Apple

Inc. sustainable strategy is evident in the production of its new products and

services. Sustainability is at the heart of design and production for this

organization and this can be seen in Apple’s most recent product launches.

• Apple is also aiming to reduce the energy usage by the organization and its

products. The new iPad boasts an even smaller battery, helping reduce the energy

usage while doubling its performance and maintaining its up to 10-hour battery

life. (Apple, 2013)

The following policies and procedures highlight the Economic Sustainability of Apple

Inc.

• Apple are investing in ways to achieve 100% renewable energy, decreasing their

carbon footprint and their costs. They have achieved this in a number of their

corporate facilities and data centers including Cork and Munich,with the final

goal being the use of 100% renewable energy across every facility at Apple.

(Apple, 2013)

• Apple Inc. is using a number of their Social and Environmental sustainability

policies to create and maintain competitive advantage in the market. Apple’s

strategy on reduced packaging and reduced energy usage has resulted in the

creation of a number of new innovative products for the organization maintaining

their status as first movers in the market for personal computing.

• Apple Inc. policy of supplier Code of Conduct has also created a level of trust

among consumers in this market that entices customers to purchase Apple’s

products over a less corporately responsible organization.

How Successful have Apple Inc. been in terms of Sustainability.

Apple has succeeded to a certain extent in creating a sustainable organization. On the

surface, Apple Inc. appears to be taking all the necessary steps to becoming a more

sustainable and environmentally friendly organization. However, on closer analyze, One

can find a number of flaws in the policies and procedures introduced above.

• In Brandlogic's 2012 Sustainability Leadership Report, Apple was named king of

promoters. (Elmer 2012) Promoters in this context relate to a company whose

perceived performance on sustainability exceeds its actual achievements in

relation to sustainable business practices. Apple Inc. does not publish official

reports on their sustainability successes and failures.

• Apple’s supplier Code of Conduct can also be viewed as Contradictory. Foxconn,

a supplier for Apple Inc. has be seen to treat employees unfairly and has been

associated with maintaining poor working conditions in its facilities. (Mattews,

2013)

• As Apple Inc. does not actually manufacture their products in their own facilities;

it is hard to monitor the sustainable practices of its manufacturers abroad. Apple

use manufacturers in East Asia to produce a number of their products, where

environmental regulation tends to be lax. (Mattews, 2013) (Elmer, 2012)

• Although the Company has phased out PVC and some other hazardous

substances, they have yet to publish a report outlining their aims and goals of

eliminating harmful materials completely from their production line.

Conclusion

Although Apple have been successful in a number of areas creating sustainable business

practices, from the above one can see that there is a long road ahead for this organization.

It is simply not enough to introduce a restricted number of sustainable strategies.

Organizations must now begin embedding sustainable practices into the organizations

routines and cultures in order to create a truly sustainable organization.

Sustainability is becoming a critical business strategy and continuous research into this

area by organizations is essential. Today, there is still a limited amount of information

available on this concept and it is on the organization to develop strategies that represent

the organizations culture and views while creating the most effective business practices

possible.

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