More climate change disasters could increase iPhone demand, Apple predicts

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  • Apple sees potential opportunities if climate change increases the amount of extreme weather or government regulation.
  • One possible effect named by Apple in a new report is that its safety features, including a flashlight, could increase the demand for iPhones.
  • But there are a lot of risks for businesses created by climate change as well.

The dangers of climate change - from rising sea levels to more frequent droughts - are expected to have a devastating impact on society.

For Apple, a changing climate could also mean increased customer loyalty and demand for iPhones.

That's one of the conclusions in a report Apple produced about its business, which was published on Tuesday by CDP, a nonprofit that collects information from companies about their environmental impact.

Apple is among numerous large companies, including Walt Disney Co and Bank of America, to provide similar reports to the organization identifying "climate-related" risks and opportunities with the potential to materially impact its business.

The surprisingly detailed report includes items about risks, opportunities, and the specific personnel at the company overseeing Apple's environmental program. Apple confirmed that the answers were submitted on behalf of Apple and that the report is voluntary and isn't required by a government regulator. While the estimates are based on public information, the report offers an interesting assessment of how Apple views the impact of climate change on its business.

For example, Apple said it would "more likely than not" benefit if various governments increased their rules about how power-efficient electronics need to be. "Apple would be well positioned to benefit from such regulations, due to our ongoing focus on the energy efficiency of our products," the company said in the report.

The potential benefit? $2.3 billion, calculated by estimating a hypothetical increase in Apple's total sales.

Another eye-opening opportunity that Apple identified in the report is that increased severe weather events could increase the demand for iPhones.

"Mobile devices can serve as the backbone communication network in emergency and quasi-emergency situations," Apple wrote. "They can serve as a flashlight or a siren; they can provide first aid instructions; they can act as a radio; and they can be charged for many days via car batteries or even hand cranks. Over time, as people begin to experience severe weather events with greater frequency, we expect an increasing need for confidence and preparedness in the arena of personal safety and the well-being of loved ones."

"This potential need reinforces a trend we believe is already in evidence following the events of 9/11, Hurricane Katrina, Superstorm Sandy, and Hurricane Harvey," it continued.

Apple said that its features like "SOS," which enables iPhones and Apple Watches to contact emergency services easily, could lead to "increased customer loyalty and demand."

Apple said that the positive impact from climate change could be as large as $920 million, and it's "about as likely as not." That was calculated by adding an additional hypothetical 0.5% to its current brand value, as estimated by Interbrand.

"Over the past few years, for example, we enabled iPhone to receive Wireless Emergency Alerts, including alerts from the National Weather Service and local law enforcement. These alerts also appear on Apple Watch. We also offer a free 'find friends' app, and a fast-access flashlight," Apple wrote.

Apple also said that it could be successful in making products which are attractive to people who have concerns about climate change or rising electricity prices.

Addressing risks

Lisa JacksonLisa Jackson, Apple's vice president of Environment, Policy and Social Initiatives.Getty

But in addition to opportunities, there are still severe risks to Apple's business that could be caused by climate change.

For example, Apple said that severe weather events could "strain the infrastructure systems" it needs to manufacture and sell its products.

Potential cost? $300 million - a significant sum, though a fraction of Apple's 2017 operating expenses of $194 billion.

Apple also said that being environmentally conscious was important for its reputation. " For example, if Apple is not transparent and does not adequately explain its actions to its stakeholders, public misconception could create the perception that the Company is not environmentally responsible," Apple wrote.

"Though any one incident is unlikely to affect the Company's reputation, over time and cumulatively a perceived lack of transparency could detract from Apple's brand value, and could reduce people's inclination to purchase from, invest in, or work for Apple," it continued.

So far, according to the report, many aspects of Apple's business haven't been affected, but Apple is planning for the future. One example that it provides is that at its new headquarters, it has installed drought-resistant trees and built berms - an investment of about $60 million.

Apple issues an environmental report every year and 100% of its stores, offices, and other operations are powered by renewable energy, the company proudly says. Leading Apple's internal environmental efforts is Lisa Jackson, a former head of the US Environmental Protection Agency, who reports directly to Apple CEO Tim Cook.

"Today, we remain focused on three priorities where we and our stakeholders believe Apple can make the biggest difference," Jackson said in a letter published last April, citing climate change, conserving resources, and using safer materials as key priorities.

Apple was among 30 U.S.-based companies to receive an "A" rating from CDP.

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