Apple's Environmental Problem: What Investors Need to Know
What's happening at Apple can affect you as an investor. Here's what's going on, what you need to know, and what you should do.
The cold, hard facts
American Public Media's Marketplace is reporting that a Chinese factory in Apple's (NAS: AAPL) manufacturing and supply chain is emitting chemical fumes strong enough to make people in a nearby village sick.
The factory is just outside Shanghai, and the village is called Tongxin. The company accused in the report is Kaedar Electronics. Tongxin used to be a quiet farming village that, starting about 10 years ago, has been steadily surrounded by factories.
The Marketplace correspondent who visited the village reported that "the air carries a strong chemical smell, like WD-40." One of the residents of the village stated that "fumes make my family dizzy."
A local environmental official recently spoke on television about the harmful chemicals emitted from the factory and told Marketplace that his bureau shut down 10 production lines at the Kaedar factory.
What you need to know
Apple is famously secretive about its supply chain. That's part of the magic -- no one knows much about Apple products until they're launched in spectacular fashion. China is also a hotbed of piracy, so the company is smart to keep its suppliers under wraps for that reason as well.
But consumers are becoming more socially conscious and want the goods and services they use to measure up. A simple action that costs a company very little or nothing at all can make a real difference in the mind of a consumer. That also means that it doesn't take much to compel a socially conscious consumer to throw a brand aside that he or she feels isn't doing the right thing.
Emerging markets, easy targets
Of course, Apple isn't the only offender, as emerging markets have been regular victims of U.S. corporate pollution. Nike's (NYS: NKE) was recently highlighted in a Greenpeace report connecting it to a supplier accused of discharging water pollutants. Other companies using the supplier were Adidas, H&M, and Lacoste. ConocoPhillips' (NYS: COP) August oil spill in Chinese waters is another notable mention, as is PepsiCo's (NYS: PEP) blacklisting in China a few years ago for contributing to water pollution.
If you're an Apple investor -- or an investor in any company for that matter -- remember that it's your stock, your company, and your money. If you're disappointed with your company's actions, don't be shy about making your mind known to management. A kind but firm email stressing your concern over potential fallout from this is in the company's best interests -- and yours. Keep track of what's happening with Apple by adding it to My Watchlist, a free service of The Motley Fool that lets you easily keep up with all the companies on your investing radar. To add Apple to My Watchlist, and see how it manages this incident, click here.
At the time this article was published Fool contributor John Grgurich loves the smell of newsprint in the morning, but he owns no shares of Apple. The Motley Fool, however, owns shares of Apple. The Motley Fool owns shares of Apple and PepsiCo. Motley Fool newsletter services have recommended buying shares of Apple, Nike, and PepsiCo; creating a diagonal call position in Nike and PepsiCo; and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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