Written by: Jay Yi, MBA; Edited by: Chris Thompson, CFA, MBA, P.Eng
eResearch | Apple Inc. (NASDAQ: AAPL; LSE: 0R2V; DB: APC) recently announced that 25% of the rare earth materials used in the new iPhone 11 series will be sourced from recycled iPhones. Apple’s longer-term vision is to one day develop all its products using only recycled and renewable materials.
To recycle the iPhones, Apple created “Daisy”, a robot with the ability to process 200 iPhone per hour, remove the tiny metals parts that were hard to pull apart manually, enabling them to recover 32kg of rare earth materials from every 100,000 recycled iPhones.
If manufacturers can source enough waste material, the once linear supply chain model between tech companies and material suppliers could change into a circular business model as companies start to invest and collaborate with parties within the value chain to manage recycling programs in an effort to increase the lifetime value of the materials used in their products.
According to Accenture’s new research report “Waste to Wealth”, there is US$4.5 trillion of lost economic growth expected by 2030 due to current business practices in inefficient resource utilization, which is forcing a short lifecycle for products and materials.
Apple currently has goals to work with vendors to reuse, recycle, and compost 100% of the waste that is created from corporate facilities, retail stores, and data centers. In 2018, they generated 74,000 metric tons of waste, of which 74% was diverted from landfills through recycling and composting programs.
Apple’s move towards becoming a more environmentally responsible business is not just good for the planet but also beneficial to current circumstances related to the ongoing trade war between the U.S. and China. As 80% of rare earth materials needed for tech products are imported from China, Apple is creating the foundations to be self-sustainable in resource needs for the future.
In addition to improving resource sustainability and economies of scale, Apple is trying to have control and visibility over their full supply chain to have transparency over where their resources are coming from and if the resources are procured in a socially responsible manner.
In 2016, Amnesty International, an NGO focused on human rights, reported evidence of child labor in cobalt mining, which through a very complex supply-chain network has ended up in Apple’s smartphones. In February 2018, Apple announced plans to source cobalt directly from mining companies to guarantee exactly where their resources are coming from.
Apple along with tech competitors Samsung, Sony, and HP, who also use cobalt in their tech products, have since joined the Chinese-led Responsible Cobalt initiative to work together in building transparency within the cobalt industry.
In fear of tarnishing their brands for illegal sourcing of materials, there is a growing trend for ethically mined resources, in which companies are searching for miners such as Strongbow Exploration Inc. (TSXV: SBW) who is providing a clean chain of supply.
Strongbow Exploration has a tin mine in Cornwall, England which has been struggling since new lower-cost deposits were discovered in Asia and South America, but the mine sees a chance to be rejuvenated with the growing demand for ethically sourced tin.
Forbes recently highlighted the company Fairphone, a smartphone developer, as “the most sustainable and ethical phone manufacturer on the planet”.
Fairphone is an Amsterdam-based smartphone producer who pledges: (1) fair working conditions for individuals that assemble their products, (2) transparency in socially responsible procurement of resources, and (3) design for products with longevity and repairability in mind.
Fairphone offers a smartphone that is modular, which means that any one part of the product is replaceable independent of any of the other working parts of the phone. This provides users the ability to swap damaged parts with replacements from Fairphone, creating a cyclical process for its products from sale to recycle.
Sustainability and social responsibility are becoming key drivers in consumer purchasing habits; therefore, it is important that even the smallest piece of a product is sourced ethically. As larger companies start to announce visions and goals towards ethics and social responsibility, smaller companies and start-ups are also taking advantage of this niche trend.
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Apple Inc. (NASDAQ: AAPL; LSE: 0R2V; DB: APC)
- Headquartered in California, United States, Apple is a designer, developer, and seller of consumer electronic products, best known for their iPhone, MacBook, iPad, AirPod, and Apple watch products.
- AAPL currently trades at US$219.44 per share with a market capitalization of US$991.6 billion.
Strongbow Exploration Inc. (TSXV: SBW)
- Headquartered in Vancouver, Canada, Strongbow is a mining company who is an associate company of Osisko Gold Royalties (TSX: OR), with a portfolio of metal assets in North America and the United Kingdom.
- Strongbow is currently trading at C$0.06 per share with a market capitalization of C$5.2 million.
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