Abstract
Apple’s sustainability and Corporate Social Responsibility (CSR) plans are meant to both make its operations efficient and address key problems that are in place in the countries where it operates. A major element of the firm’s CSR plan that has created lasting competitive advantages is the use of manufacturing practices that cause the least harm to the natural environment, such as the use of alternative sources of energy to power its operations. Through this initiative, the firm has successfully reduced its total costs and improved both its brand value as well as financial performance. By involving other stakeholders in its operations through its CSR plan, Apple is also able to gain valuable data that can be utilized to enhance its performance. The sustainability and CSR strategy utilized by the company enable it to create value through both efficient operations and an improved brand reputation among key stakeholders.
Introduction
Apple Inc. is a technology company that specializes in the manufacture and distribution of electronic goods and online services. The company is known to be highly innovative and has been a pioneer in the design of new technologies in many fields (Safian, 2018). Through its sustainability and Corporate Social Responsibility (CSR) strategies, Apple has attained a sustainable competitive advantage through both cost reduction and supply chain efficiencies. Sustainability and CSR also improve the company’s brand reputation and enable it to engage with both customers and employees about key issues that can be addressed through its CSR strategy.
Existing Corporate Sustainable Reporting Disclosure and How They Contribute to Shared Value Creation and Firm Value
Apple’s investment in sustainability enables it to improve its public image and, as a result, grow its brand value. One of the key reasons why firms undertake corporate social responsibility is to boost their public image by creating awareness of the initiatives they are carrying out to improve the state of affairs in different communities (Pradhan, 2018). Through its sustainability and CSR strategy that targets distinct communities, Apple further cements its reputation as a firm that creates new solutions that improve the quality of life of its customers. Customers in communities where these initiatives are undertaken are more likely to recognize Apple as a brand and purchase its products. Apple’s sustainability strategy, therefore, creates lasting value for the company by improving its brand reputation.
Apple’s sustainability and CSR strategy also provide competitive strengths that enable it to operate much more efficiently and stay ahead of the competition. Sustainability is associated with numerous internal benefits that can give firms operational advantages in their industries (Pimonenko et al., 2020). Key gains include cost reduction, product quality improvements, and innovative work processes (Cantele & Zardini, 2018).
By adopting a sustainability strategy, Apple was able to profit from these improvements that made its operations efficient. The adoption of renewable energy, for instance, helped the company to substantially reduce its energy costs. The cost reductions attained over the long term translate to a form of competitive advantage that gives the company an edge over the competition. Sustainability, therefore, enables Apple to gain lasting competitiveness as it boosts the company’s performance.
The sustainability and CSR strategies used by the firm also enable it to grow its operations by involving other stakeholders in its operations. To effectively design and implement its social responsibility programs, Apple carries out detailed research that identifies key issues in communities that need to be addressed (Ceil, 2020). The company then designs programs that are meant to aid communities in addressing these problems. Since CSR requires the company to carry out some research about the communities in which it operates in, valuable insights and information can be gained that can be used to improve different areas of its operations.
According to Carlini et al. (2018), CSR initiatives can act as a means of gathering data that can be highly useful to firms in a variety of ways. Employees also provide input to the company on how it can aid different communities to address the challenges they face. Employees, as a result, will be better motivated to work for the company. Sustainability and corporate social responsibility, therefore, enable Apple to engage with both customers and employees on ways through which it can use its resources to address different issues that exist in specific communities.
Corporate social responsibility also enables Apple to attract and retain highly talented staff. Studies have shown that employees are more interested in firms that have corporate social responsibility programs targeting their communities (Carlini et al., 2018). When prospective employees see the contribution that the company is making in their community through its CSR program, they are more likely to view the firm favorably and be willing to join it in case the opportunity presents itself. Apple’s CSR and sustainability strategy that targets a diverse range of communities and countries, therefore, makes it more appealing to highly targeted employees and increases its chances of retaining them once hired. Apple’s sustainability and CSR strategy, therefore, makes it easier to recruit and retain highly talented staff who can enable its operations to grow.
Apple’s sustainability strategy also makes it appealing to environmentally conscious consumers. Studies have shown that consumers are more likely to support brands that use green manufacturing techniques and the ones whose products include one or more sustainable features (Pimonenko et al., 2020). By adopting a green manufacturing strategy and reducing the damage that its products cause to the natural environment, Apple, therefore, attracts environmentally conscious consumers, in addition to growing the value of its brand.
Corporate Sustainability Risks and Opportunities Mitigation Strategies
Opportunities for Financial Growth
Environmental sustainability is a key element of Apple’s CSR strategy and presents both benefits and challenges that can change how it performs financially. As a firm that maintains a sophisticated supply chain that involves multiple partners. Apple has created a detailed strategy that ensures its operations do not harm the environment in both the short term and long term. The use of alternative forms of energy for example aids in reducing its carbon footprint. The firm not only invests in sustainable power meant for its operations but has also created an infrastructure that can provide homes with the same energy.
For example, Apple invested in a 62-Gigawatt renewable energy plant in Europe that is expected to power over 20,000 homes (“Apple expands renewable energy footprint,” n.d.). In China, the company has built alternative energy plants that can produce more than a hundred megawatts of clean power. By investing in renewable energy in different communities, the company both improves its brand value and promotes environmental sustainability at the same time, which in the long run improves its financial performance.
In addition to investing in renewable energy, Apple has also changed the design of its key products as a way of making its supply chain more sustainable. Design elements of its flagship brand, the iPhone and MacBook, for example, were changed in ways that made them easier to recycle, which improved the overall sustainability of the company’s supply chain (Weatherley, 2019). To enhance the use of sustainable practices within its supply chain, Apple has created a detailed supplier code of conduct that is focused on sustainability (“Apple supplier code of conduct,” n.d.). Suppliers have to carry out their activities in ways that cause the least harm to the natural environment and is fair to other stakeholders.
The extraction of materials, their processing, storage, and transportation are all designed to support sustainability and reduce the damage that results to the natural environment. The company carries out audits of its suppliers to ensure they comply with required guidelines (“Apple supplier code of conduct,” n.d.). Detailed supplier assessments are carried out from time to time to ensure that they comply with best practices recommended by the company as relates to sustainability. By making its supply chain sustainable, Apple makes its operations more efficient by reducing operating costs and improving profits.
Key Risks and Mitigation Strategies
A key risk associated with sustainability is the fact that it leads to major investments in research and development initiatives that are not guaranteed to be successful. Since sustainability initiatives vary substantially from industry to industry, firms may need to carry out detailed research that would identify ways of making their activities more sustainable (Cantele & Zardini, 2018). There is no guarantee that initiatives adopted by a firm will be successful, irrespective of the costs spend on research. As a leading technology firm, Apple has one of the highest research budgets globally and spends a major portion of it trying to identify ways of reducing environmental harm. Management, therefore, has to risk spending heavily on research costs while knowing that the results attained may not be marketable.
Firm-specific factors can also make it difficult for firms to make their operations environmentally friendly. Despite the best efforts made by firms to incorporate green manufacturing in their operations, it may be difficult and require a lot of resources if all key processes and procedures of the organization are to be altered in a way that can support sustainability. Most firms usually have rigid processes that are not flexible to change and may need high-value investments if they are to be modified successfully (Hintošová et al., 2020). Despite Apple’s best efforts, not all areas of its operations are flexible, as changes cannot be easily implemented in certain instances. The company, therefore, has to make a trade-off between making high profits or protecting the environment, as certain changes can adversely overall profits.
Apple also faces the risk of regulatory action in case it fails to comply with laws on emissions and other forms of pollution. While Apple itself may be sustainable, its partners in the supply chain may not, which can still lead to regulatory action that can affect its operations. Due to the large and sophisticated supply chain it operates, Apple is not able to control the actions of all its partners, meaning any failure along the chain can adversely affect its performance. The government of China, for example, has put much pressure on Apple to ensure its manufacturing activities are sustainable (Webb, 2017). The company, therefore, needs to put in place much more detailed checks and balances that would ensure all its supply chain partners comply with recommended environmental regulations.
CSR can also create several challenges that can adversely affect the financial performance of a firm. The key to this is CSR and sustainability can only be achieved by sacrificing resources and assets that could have otherwise been used to improve overall profitability and contribute to growth (Wang, 2017). A business intending to pursue CSR must therefore choose between competing business objectives. A firm may, for example, be required to sacrifice short-term profitability if it intends to successfully invest in sustainability. Apple’s CSR strategy is also quite large and needs high-value investments to be successfully executed. Irrespective of the resources available to the firm, the high-value investments it makes in CSR activities can place it in an unfavorable competitive position, as other firms may use their resources to grow their operations instead. If the resources used for CSR were used to enter new markets, the overall financial performance would substantially improve.
Conclusion
Apple’s sustainability and CSR strategy focus on promoting environmental conservation and empowering people in different communities across the world. The strategy creates value for the company by reducing its operating costs and improving its brand strength. The company’s sustainability strategy is, therefore, a source of competitive advantage that enables it to reduce its operating costs and at the same improve its brand strength. However, the high costs of the sustainability strategy used by the company provide some slight competitive disadvantages, as the resources used could be invested in other areas of the firm’s operations.
References
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