Big Tech Companies Have Big Sustainability Impact
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Even big companies like Apple need a little, or a lot of, help from their friends to meet sustainability goals.
The tech giant with a massive global supply chain is progressing toward its greenhouse gas emissions goals. In its latest sustainability report, Apple reports slashing gross carbon dioxide emissions by 22% from 2022 to 2023. Since 2015, Apple has reduced gross emissions by 55%.
That’s an impressive achievement. How did they do it? By encouraging more sustainable operations from their suppliers. In this case, the company has pushed suppliers to use more renewable energy sources and become more energy efficient. More than 100 supplier facilities avoided 1.7 million metric tons of carbon emissions and saved 2 billion kilowatt hours of electricity.
Admittedly, Apple did buy some carbon offsets to cancel emissions from a few particularly difficult carbon sources, but that shouldn’t take away from the overall achievement.
No Company Stands Alone
As the push for net-zero emissions moves ahead, companies find Scope 3 emissions tied to the supply chain present a significant challenge. Fully understanding the extent of the carbon footprint takes time, data and technology, as well as investment with a long-term payoff at best.
Because these emissions occur outside the company’s control, they are the most expensive to track and often the largest segment of most carbon footprints.
For large companies, engaging the supplier network is critical to reaching sustainability targets. In some cases, that means stringent oversight and accountability for performance. In others, companies look to suppliers for innovation. Sharing innovations and increasing other organisations’ capacity for sustainability reflects a genuine concern for the environment rather than ticking boxes on the assessment form.
Improving supply chain sustainability is a team sport. Collaborative approaches can lead to better results for all involved through better transparency and information sharing across the global supply chain.
For procurement leaders, building a sustainability-focused relationship with suppliers can be a matter of perspective. Organisations must rethink how they use supplier data. Rather than using it to negotiate better terms for products and services, focus on building a collaborative process. Ultimately, helping suppliers succeed will help reduce the burden on buying organisations.
Massive Carbon Challenge for Tech Giants
The electronics division of Korean chaebol Samsung reports the largest carbon footprint of any technology company, with annual CO2 emissions of more than 20 million metric tons.
Samsung plans to achieve net zero carbon emissions by 2030 for its mobile and home appliances business, and by 2050 company-wide, which includes its chip division.
These are ambitious goals for a company with 2,500 suppliers, assembly plants and sales networks in 74 countries, and more than 290,000 employees. The company faces persistent challenges such as difficult-to-mitigate production methods, complex supply chains, scarce resources, rising material prices and limited renewable energy supplies, especially in South Korea.
In order to meet these goals, Samsung has integrated sustainability across its many product lines.
The Galaxy S22 series mobile phone was the first product to incorporate recycled plastic fishing nets or ghost nets. A few years later, recycled materials are found in all Galaxy mobile products, including smartphones, tablets, PCs and wearables. Other device components, including batteries and speakers, incorporate recycled rare earth metals and steel. New phones are packaged in a box made of 100% recycled paper material, recovering more than 2,760 metric tons of recycled paper.
Samsung sees innovation as the key and has launched the Samsung Climate & Circularity Tech Challenge, a startup competition in collaboration with Extreme Tech Challenge (XTC), to identify ground-breaking ideas focused on carbon emission measurement and management.
Microsoft: Good Faith vs. Harsh Realities
Microsoft faces similar challenges in meeting its net-zero emissions goals. Ironically, business expansion by suppliers has led to increased carbon emissions as they open new facilities and increase their transportation usage. While some of Microsoft’s suppliers are making progress in cleaning up their carbon footprint, many have increased their emissions. It turns out some suppliers were not using any renewable energy, instead relying entirely on fossil fuel sources.
Despite good-faith efforts, sustainability efforts are thrown off track by business realities. Microsoft’s own emissions have grown along with business expansion that isn’t powered by renewable energy sources. Chipmakers Intel and Qualcomm reported similar results. Emissions increased due to rising sales supported by new facilities. Gains from using renewable energy were lost in the overall increase in activities.
Granted, Microsoft – along with Google and Apple – has reduced emissions from its direct activities. A Greenpeace analysis found that Microsoft, along with Apple and Google, were the only big tech companies that reported 100% renewable energy use in their direct operations. However, those emissions are only about 5% of the overall footprint relative to the supply chain.
It’s hard to move the needle for multinational companies like Microsoft, with over 400 factories in 23 countries and thousands of suppliers. Not to mention, the number of users of Microsoft products expanded greatly during the shift to working at home during the pandemic.
Introducing Renewable Energy Targets
Lack of progress in emission reduction is not always due to a lack of effort. Some regions don’t have access to enough clean energy to power large operations like a chip factory.
Microsoft invested millions in adding onshore wind and solar capacity in Ireland, which is equal to about one-third of the country’s target for renewable energy. Suppliers can also rely on carbon offsets to achieve targets instead of directly replacing fossil fuels with renewables.
Similarly, Apple launched supplier incentives to encourage 100 percent renewable energy targets and has encouraged more than 200 to use clean energy. Still, the company does not yet require suppliers to commit to 100% renewable energy. Microsoft has built renewable energy capacity into several countries’ national grids but does not have a similar incentive program with suppliers.
The tech sector, in particular, has an impressively global supply chain and often can’t directly control how and where its suppliers operate. Sustainability efforts can produce value by reducing energy costs and increasing efficiency in other ways, such as nearshoring resource extraction and manufacturing to reduce transportation emissions.
Through supplier engagement, tech companies are seeing sustainability efforts as a competitive advantage in their value chains.