Apple has cultivated an image as a conscientious steward of the environment and an impassioned promoter of social causes. And that shows in the high ranking of Apple (No. 5) on IBD's 2022 100 Best ESG Companies list.
The consumer electronics giant has set some bold environmental goals.
By 2030, Apple has pledged to be carbon neutral across its entire worldwide supply chain and the life cycle of its products. It's already carbon neutral for its own worldwide operations, including business travel and employee commutes.
And Apple is using its spending muscle and influence to drive the growth of renewable energy sources, including wind and solar power.
In April, the iPhone maker announced that its energy suppliers had more than doubled their use of clean power over the last year. It said over 10 gigawatts of capacity were operational today out of nearly 16 gigawatts in total commitments in the coming years.
Apple Stock And Restoring Mangrove Forests?
Also, Apple is investing in nature-based solutions to remove carbon dioxide from the atmosphere to combat global warming.
These include efforts to protect and restore forests, wetlands, and grasslands. For instance, it is working with environmental groups to maintain mangrove forests in Colombia and India. Mangroves are important ecosystems for carbon capture and protecting shorelines from weather events.
"We're mindful that global challenges like climate change must be tackled not just by governments but by innovative companies," Apple Chief Executive Tim Cook said in the company's 2021 ESG Report. ESG is short for environmental, social and governance.
"We help create opportunity in communities on the front lines of climate change through the Restore Fund, which supports carbon removal and sustainable forestry," Cook said in Apple's 2022 ESG Report.
Boosting Use Of Recycled Materials
Plus, Apple has set an ambitious goal to one day make its products using only recycled or renewable materials. It's already recycling iPhones to recover minerals and rare earth elements for reuse.
In its fiscal 2021, nearly 20% of the materials in Apple products sold came from recycled sources. It doubled its use of recycled tungsten, rare earth elements and cobalt.
Such an initiative could help Apple's bottom line as well.
"While difficult to quantify, we expect recycling/trade-ins to have a directionally positive impact to lowering costs and thus improving margins (for Apple), as well as shortening the replacement cycle in the long run," said Barclays analyst Tim Long in a recent report. Long rates Apple stock as equal weight, or neutral.
Apple has won numerous awards and recognition for its ESG efforts.
For instance, in the environmental realm, it earned the Environmental Protection Agency's Safer Choice Partner of the Year Award for the past two years. It also has an A- rating for climate change action from CPD, a global nonprofit that runs an environmental disclosure system.
Apple Stock Ranks Fifth On ESG List
For investors who care about a company's ESG initiatives, Apple stock is a standout.
In addition to environmental causes, Apple is working with community groups to improve technology education and job opportunities, especially for minorities.
"We're also partnering with nonprofit and community leaders to help students access a quality education and learn vital skills like coding, to break down systemic barriers to opportunity in our economy, and to invest in the next generation of diverse entrepreneurs and problem-solvers," Cook said.
Apple stock ranks fifth on IBD's 2022 list of the 100 Best ESG Stocks, behind Worthington Industries, J.B. Hunt Transport Services, Verisk Analytics and Texas Instruments. To compile its list, IBD considered ESG scores, as well as stock performance and corporate financial metrics. Apple also placed No. 1 in this year's technology industry category, ahead of CommScope and IBM, No. 2 and No. 3 respectively.
Mutual Funds Focused On ESG Moves
"From (consumer) privacy to social causes to carbon footprint, it's part of the brand of Apple," Wedbush Securities analyst Daniel Ives told IBD. "ESG has been part of the core DNA for Apple over the last decade."
The company's many ESG initiatives likely have bolstered Apple stock, Ives said. That's because ESG is a focus of many mutual funds and individual investors today, he said.
"ESG used to be a bell and whistle, something that was nice to talk about at a shareholder meeting," Ives said. "Now it's become more important for public companies, especially Apple being such a world leader and brand that's revered around the world."
Also, Apple's environmental, social and governance initiatives haven't been done at the expense of profits, Ives said. "There isn't an offset that investors fret about," he said.
Ives rates Apple stock as outperform with a 12-month price target of $220 a share. AAPL had a Composite Rating of 89 out of 99 on Aug. 31, when the IBD's ESG list was compiled. To see its current ratings and the AAPL stock chart visit IBD's Stock Checkup page.
Large Investors Look For Sustainability
A survey by investment bank Jefferies found that institutional investors have a different view of corporate ESG initiatives than consumers.
"For institutional investors, the thing that matters more than anything is creating high-quality, sustainable products that are cost-competitive, followed by transparent disclosures," Aniket Shah, global head of ESG strategy for Jefferies, said in a recent report. "Tesla is a prime example of a company that has outperformed due to a high-quality, sustainable product."
By comparison, ESG-focused consumers are interested in supporting companies that pay a living wage, ensure gender pay equity, and create sustainable products, Shah said.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
