Apple Open Secrets. . . SHHHHH Don't tell any one! Ping!
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Posted on 03/06/2014 1:54:22 AM PST by Swordmaker
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.
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You were asking for some different explanations of Cook’s answer? Here ya go. . .
Here is what a very astute poster said in the comments section of the source article:
__________________________
KenG
There is no dilemma, only a misunderstanding of laws, perpetuated by apostles of St. Milton. There is no law that says management’s top priority is to enrich shareholders. Their job is to run the company in a responsible and sustainable manner so that it can indefinitely generate profits for them (I guess even if those profits are never distributed). Sometimes this means spending money or foregoing revenue for PR or marketing purposes. Other times it means spending money or foregoing revenue to help ensure you still have lots of customers. The decisions management makes on how to market their products, how to design them, and how to build them, are not for shareholders to approve or disapprove. It’s management’s decision, so if they feel environmental issues will threaten their future revenues, it’s their call to do whatever makes sense to minimize those issues.
When Katrina devastated New Orleans, Wal-Mart sent truckloads of water to give away for free to residents with no water. Nobody accused them of violating their fiduciary duty. Intel spent tens, if not hundreds, of millions of dollars promoting USB and wi-fi standards, with no direct revenue, and nobody accused them of wasting money. These are marketing decisions that don’t have to get approved by misinformed shareholders, no matter what economic bible they quote.
And as Cook correctly stated, if you don’t agree with how the company is being run, you should get out of the stock. Owning shares of stock in a publicly traded company does not give you any say over management decisions - at best you get to vote for a board of directors, and they get to hire and fire top executives. Given how little influence average stockholders have over corporate boards, they would be better served by selling their shares when they don’t agree with management.
Tell that to Carl Ichan and dozens of other big stick Activist Shareholders.
Just as a side note I noticed this tidbit:
“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.”
The vote count is utterly meaningless, Proxies are granted by negative affirmation That means that if the share holder does not actively assert his voting privilege by voting somebody else will vote for him by proxy.
Apple as a company has every right to run itself as it wishes within the law. And Tim Cook’s point about investors getting out of the stock if they don’t like the way it’s being run makes sense. The rub is that these so called green policies are based on a government-facist scheme called global warming/cliamte change, and many of Apples loyal investors know it and don’t like it.
Then let em sell their apple stock and invest in Lenovo. The Chinese don’t worry about green policy.
This has strange implications for who's side these guys are really on?
___________________________
So What Were We Doing at Apple and Why Did Tim Cook Get So Mad?
Mar 5, 2014 at 12:27 AM
Amy Ridenour in Business, Climate, Environment, FreeEnterpriseProject, Regulation
I hadn't yet been able to find the time to write a properly comprehensive post on what we were doing at the Apple Computer shareholder meeting last Friday, but with something like a thousand news media articles out there getting the story either wrong or incomplete, I don't want to leave our story untold.
The Guardian newspaper sent us three questions on Monday for an article, it said, to run Tuesday. I answered them by email and in so doing touched on at least some parts of this story that are largely uncovered.
As Tuesday has come and gone, I figure I've given the Guardian fair time to use the words first, if it wanted to, so I'm going to post its three questions, and my answers. After that, I've added a bit more detail that goes beyond what the Guardian asked, but which should give anyone following this story -- and that includes you, Apple fans -- some food for thought.
The three questions:
1) Will [National Center Free Enterprise Project Director Justin] Danhof [who represented the National Center for Public Policy Research at the shareholder meeting] be withdrawing any investments from Apple? Will any other NCPPR figures?2) Do you plan to continue campaigning on this issue against Tim Cook, and if so what measures will you consider next?
3) You mention that over 95% of all climate models have over-forecast the extent of global warming - any chance you can give me a source for that?
And the question with my answers:
1) Will Danhof be withdrawing any investments from Apple? Will any other NCPPR figures?
Neither the National Center for Public Policy Research nor its top executives have any plans to sell our shares in Apple. We've been an Apple-only office since 1985 and do not intend to abandon the company in any respect despite CEO Tim Cook's invitation to do so. Cook does not have the authority to determine who is allowed to be a shareholder.
2) Do you plan to continue campaigning on this issue against Tim Cook, and if so what measures will you consider next?
We are not campaigning against Tim Cook; we are campaigning for transparency and competitive markets and we will continue.
Tim Cook's agitated response at the shareholder meeting was somewhat surprising. Apple cares greatly about return on investment, and Tim Cook knows it. In fact, while we asked that Apple undertake no projects specifically to fight global warming that are unrelated to business goals - a very reasonable pledge we were able to get from General Electric - we actually have no evidence Apple is doing any such thing. It is a very profit-focused company. But as our shareholder proposal made clear, we sought transparency on this and related issues, which is a reasonable request for a shareholder to make.
We wonder if Mr. Cook's outrage was feigned. What constitutes a "green" company is subjective, but it is hard to imagine that Apple qualifies. Minimalist packaging is a big priority within the sustainability movement. Apple's packaging is beautiful, but not minimalist.
In 2012, Apple withdrew from the industry-funded Electronic Product Environmental Assessment Tool (EPEAT) sustainability registry when many believed the then-new line of MacBook Pros would not meet EPEAT's standards. Days later, Apple rejoined EPEAT, and somehow earned EPEAT's top "gold" certification for its new laptop. How was Apple able to earn this approval? Would a smaller company have been treated the same? Minus the transparency we sought with our shareholder proposal, who knows?
And then there's cap-and-trade. Apple was all for reducing U.S. carbon dioxide emissions through a cap-and-trade law. But Apple does a very substantial amount of its manufacturing in China, which would not have been subject to the law. Would the same be true for all current and future Apple competitors?
Apple is extremely good at looking green. This is what the famous environmental groups call "greenwashing." Why is Al Gore on its board? Because of his technology and innovation expertise or because he helps make Apple look green? Why did Apple hire the Obama Administration's scandal-plagued Environmental Protection Agency chief? Was it because executives who circumvent transparency laws are highly prized, or because hiring her helped make Apple look green?
Observers should remind themselves that Apple manufactures devices that use a lot of energy and Apple works hard to assure that customers will want to replace them every few years, if not sooner. Apple's business plan includes making its products disposable. Is this a sustainability strategy, or a return-on-investment strategy?
Don't get us wrong. We love Apple products. Our office has used them exclusively since 1985, far longer than Tim Cook has been employed there. We even stuck with Apple through the 90s, wondering for a time if we would be the last Apple users anywhere. But Apple is a profit-making company, not an environmental organization, and Tim Cook's statement to us that we can get out of his company's stock if we don't agree with his non-profit priorities ignores that Apple is all about profits.
Tim Cook didn't get paid some $40 million in 2013 because he's an environmentalist, but he is more valuable to Apple when he plays one on TV. As such, Tim Cook's statement may simply have been public relations. He looked nice and green, standing there, indignant that someone might think one of the world's most successful companies should focus on... business success.
But does Apple walk this talk? And since Apple is considered to be "cool," does the media even expect it to?
We asked for nothing that would hurt the environment. In fact, once they got over the fact that it is so-called "global warming deniers" (though we reject that the nasty Holocaust-referencing slur) like the National Center for Public Policy Research that was proposing it, even environmental groups presumably would like our call for transparency regarding trade associations that presumably are pro-green, but which are quite secretive, and which run the risk of favoring big companies over small ones, without regard to the environment.
3) You mention that over 95% of all climate models have over-forecast the extent of global warming - any chance you can give me a source for that?
Of course we can give you a source for my statement about the climate models. I am referring to an analysis by climatologist Dr. Roy Spencer. He put a description of his analysis on his website at:
In case you are not familiar with Dr. Spencer, he is regarded as a "skeptic," but he does believe some portion of global warming is due to human influences (he just isn't prepared to say how much). When various persons report that 97% of all climate scientists believe in global warming/climate change (the wording used varies), Dr. Spencer's work is included among, not outside of, the 97% they refer to. His bio and email address is included on the website and he is known to be a person who is open to answering questions about his findings.
That's it for the Guardian's questions and answers. I still recommend British writer Tim Worstall's article on all this, as I believe he got closer to what is going on here than almost everybody else (I haven't read every article on this story and don't want to be unfair to anyone).
I'll also end this post with a closing thought. Last year, we flew a member of our board of directors to the Apple shareholder meeting to ask Tim Cook a question about trade association "sustainability" activities that officially are about being green but which in practice threaten competitiveness and give big businesses an unfair edge over smaller companies. Tim Cook only took five questions (one about bathrooms!) and ignored ours. So we issued a press release. Did anyone care? Mostly, not.
So for the 2014 shareholder meeting, we submitted a shareholder proposal calling for reasonable transparency for these trade association activities, and we asked Tim Cook a question (which wasn't easy; after calling on our representative Cook tried to pick someone else immediately after recognizing him, but our guy got his question out fast) to find out where Apple really stands. There are many calm and professional ways Cook could have answered our question, but he instead choose to lose his temper, pretend we objected to things like the development of accessibility tools for the blind (we don't object and never mentioned the subject), and duck much of what we asked.
Why is that? In our view, it isn't because Apple is too green. It is because it is brilliant at greenwashing. Tim Cook got a question that -- had he answered it -- could have illustrated the difference between Apple's green reputation and Real World Apple.
Tim Cook didn't like that question, so he scolded us and played the green card, and got out of giving a straight answer.
And based on the amount of email we've gotten since Friday with the words "F--k you" in them, a lot of you fell for it.
We suggest that you ask yourselves: Why did Apple's management oppose our shareholder resolution [resolution #9 at the link], which called for transparency in its relationships with trade associations and sustainability registries such as EPEAT?
A business that alienates the people most likely to be able to afford their overpriced product? SELL! SELL! SELL!!!!!!
What about the landfills where all these products will end up? Don’t batteries leak and cause horrible damage? All these libs buy all these pads, pods and Mac computers and they never think about the final dump destination.
Or is there a “green” disposal that I have not learned about yet?
“Or is there a “green” disposal that I have not learned about yet?”
Yep.
http://www.apple.com/recycling/
So Tim Cook is a pro-gay marriage, global warming wacko. That’s no reason I shouldn’t buy an ipad
Don't know when it's going to bite 'em in the ass but it will happen! Cook ain't no steve Jobs!!
Oops...’he real’ = ‘his real’
Apple investors could care less just so long as the company and stock are doing OK.
Agreed. Capital will always seek its highest rate of return. Tim Cook is a fools fool.
“Tim Cook is a fools fool.”
I’m not impressed with him as a CEO so far, but it’s too early to say much. We’ll see how Apple products pan out over the next few years.
I was hoping to see more diversification among its computer offerings, but so far it hasn’t happened. I think a rack-mountable, clusterable version of the Mac Pro (with more CPU and GPU slots per machine) would be a smart addition to the Apple lineup.
Apple’s the world’s largest company by market cap. It needs a more diversified lineup, and should certainly sell the most advanced and fastest workstations, servers and supercomputers.
Thanks. If I ever get an Apple product, I’ll know how to dispose of it.
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