Apple Is Hardly Hit By A Loss Of Green Credentials

Apple’s (NASDAQ:AAPL) decision to pull 39 of its Mac products from an environmental certification program called the EPEAT (Electronic Product Environmental Assessment Tool) may have run afoul of quite a few U.S. government agencies and universities. The city of San Francisco, for one, has decided to bar its 50 departments and 28,000 employees from purchasing a Mac using public funds. ^[1] Many other government agencies and universities, who are still reviewing their computer purchasing decisions in the wake of this development, may follow suit.

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Little impact on Apple

While a non-resolution of this issue could see a slimmer presence of Apple Mac products at public organizations, we do not see much of an impact on Apple’s stock value primarily because the EPEAT doesn’t set environmental standards for smartphones and tablets, which leaves Apple’s two most valuable products, the iPhone and the iPad, out of its reach. We estimate that the iPhone and the iPad combined account for about 70% of Apple’s value with the iPhone taking up more than 50% of our $700 price estimate. The Macintosh line, on the other hand, makes for a little more than 10% of Apple’s value due to the sluggish growth in PC sales as opposed to the booming mobile industry.

Also, most of Apple’s Mac sales are likely to consumers rather than public institutions. For instance, only about $45,000 of San Francisco’s total $200 million IT budget is currently used in buying Apple’s Mac products, according to Bloomberg. While San Francisco alone may contribute only a tiny fraction of Apple’s Mac sales last year, it might be felt that if more organizations follow suit, it might put a sizable proportion of Mac sales at risk.

However, it is likely that the city of San Francisco came to a decision on this matter as quickly as it did due to the small impact that it would have on its future computer purchasing decisions. Others, with bigger budgets for Mac purchases and are still reviewing their policies, may not want to take a similar decision and instead use a different environmental standard.

Apple, for its part, came out in defense of its decision hinting that the EPEAT standards were outdated and that the Macs conform to stricter environmental standards such as the government’s Energy Star program instead. Jim Dalrymple of The Loop adds that the EPEAT has itself admitted previously that its certifications are old and require updating. ^[2]

It is therefore possible that Apple, one of the founders of EPEAT, and EPEAT come together to work out the standard issues and bring them up-to-date. If not, a number of public institutions may follow San Francisco ‘s lead while others may choose to change their policies to use a better environmental standard. Whichever way the scenario plays out, any material impact on Apple’s stock value could at best be minimal.

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1. Apple Quitting Green Registry Leads To Purchasing Fallout, Bloomberg, July 12th, 2012 [↩]
2. Apple responds to EPEAT concerns, The Loop, July10th, 2012 [↩]