Apple's Tim Cook And His Dilemma Over Sustainability And Climate Change

By Tim Worstall , written on March 3, 2014

From The News Desk

Apple's normally soporific annual shareholder meeting contained a glimmer of interest this year when a shareholder from a conservative think tank asked the company to stop worrying about sustainability, green issues, and climate change and concentrate instead on the bottom line of profitability.

Tim Cook essentially told his interrogator from the National Center for Public Policy Research to go boil his head, which is nice of him and provides good copy. But this fails to elucidate the dilemma that Cook actually faces. He is indeed focusing on the bottom line by taking the actions that he does on these very issues. It's just that he can't actually stand up and say that.

As reported in The Mac Observer:

[Cook] didn't stop there, however, as he looked directly at the NCPPR representative and said, "If you want me to do things only for ROI reasons, you should get out of this stock."

It was a clear rejection of the climate change denial, anything-for-the-sake-of-profits politics espoused by the NCPPR. It was also an unequivocal message that Apple would continue to invest in sustainable energy and related areas.

The other shareholders clearly agreed that such issues should continue to motivate Apple's actions: 97 percent of them voted against the original proposal that the company should not take regard of these matters. And yes, sure, I sign up to Milton Friedman's idea that a company should be viewed as having one purpose and one purpose only, which is to enrich its shareholders. With a couple of obvious caveats, legality for example, playing their part. However, and here's the dilemma, it's not actually obvious that Apple's activities in green and climate change matters do not in fact add to the bottom line.

Let's think through the things that it actually does. First, its commitment to the use of renewable energy. Whether solar and Bloom Boxes at the data centre in North Carolina, or in their other offices, there's no indication that this costs more than other energy sources. Sure, green power isn't economically viable in most places (although in some locations and uses it is) but it's not actually the consumer of the power that ends up paying that extra cost. Subsidy systems vary but almost all of them have either the taxpayer or all power consumers paying the extra costs. Things like feed in tariffs and guaranteed prices for renewable electricity mean that all power consumers on the grid are paying the higher costs of that type of power, not just the people who are saying that they're using green power. So while society as a whole might be paying some extra amount for Apple to be using renewables it's not in fact Apple that is.

Given my background in the minerals trade I'm also interested in Apple's work on conflict minerals. Yes, the company just announced that its tantalum supplies (used to make capacitors) are now free of material sourced from slaves and child workers in the DR Congo. But it's worth noting that it's done this the cheap and sensible way, through the industry smelter initiative, not the expensive and stupid way proposed by the Enough Project and Global Witness and written into Dodd Frank. A few millions (and it won't have been more than that) to gain the marketing and bragging rights to being conflict free could very well add, not detract, from the bottom line.

There are, however, other areas where Apple clearly doesn't take the environmentally righteous path. For example, all iPads and iPhones are flown from the manufacturing plants to the distribution warehouses. The reason is that the interest on stock is higher than the air freight costs. So, it's actually cheaper, costs less overall, to fly than ship them by sea. And CO2 emissions be damned where the bottom line is concerned.

Similarly, the teardown companies regularly castigate Apple for building shiny shiny that it almost impossible to upgrade, repair or even recycle. One example is the practice of gluing batteries into place meaning that once you've gone through the battery's lifespan of recharges you've got to junk the entire device. Very sustainable that is: but also highly profitable for the company, which gets to sell you a new one.

A closer examination thus seems to show us that Apple does indulge peoples' green fantasies when it doesn't cost them much if any money and entirely ignores such greenwashing when it might indeed affect that profit line.

And that, really, is Cook's dilemma. He knows this, he's a sharp enough cookie, but he cannot actually stand up and say so. The golden glow that the company gets when Greenpeace lauds its commitment to renewables is worth money in the bank. For there's a large enough portion of us mug punters who will decide how to spend our money based upon such considerations. But Cook cannot actually say that Apple only does the easy stuff that doesn't cost anything for this will  shatter that carefully created illusion that they're not a rapaciously capitalist company focused purely on that bottom line.

Therefore, when Cook is asked by some activist why he's wasting money on greenery and not running the company purely for profit Cook cannot tell him the truth. That the company is being run for profit as it only does that amount of greenery that improves the profit margin and it most certainly doesn't do anything that actually costs. For that would be to defeat the objective of doing the little that is being done.

[Image via Apple]