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This article is part of our Rising Star Portfolio series.
Apple (Nasdaq: AAPL ) is an amazing company that I'd love to include in my Rising Star portfolio. But I can't. I think that despite Apple's incredibly positive attributes, its corporate social responsibility falls very short in many ways.
Don't get me wrong; I greatly admire Apple's history of being way ahead of the curve in providing what consumers wanted (and later what they needed). Apple consistently paved new paths in technology and in the ways we consume content. For example, years ago it was unfathomable that you could carry your entire music collection around in your pocket. Thanks, Apple!
Apple has long been a champion of beautiful, sometimes downright amazing design. It brought color and life to an industry that was mired in green and amber screens; ugly, unintelligible DOS; and beige boxes. Apple made computing accessible and even appealing to everyone.
These factors have created a powerhouse generating stunning levels of growth. And as much as many investors love to complain about how Apple sits on a massive cash cushion, I believe Apple's cash is a beautiful thing in current difficult times.
Beauty's only skin deep
However, my Rising Star portfolio focuses on socially responsible companies, and that's where Apple falls short. It's tempting to say it's enough that Apple has enriched our lives with wonderful products, but in my opinion, it's just not.
The lingering scandal involving high suicide rates at its supplier Foxconn's factories ruins Apple's chances for a guilt-free halo. (Recently, Apple banned an app that showed the related ugly side of electronics manufacturing from its App Store.)
Speaking of Foxconn, here's another issue: environmental impact. An environmental group recently reported that Apple's Chinese suppliers are indulging in "pollution and poisoning." These include Foxconn, which reportedly "is involved in serious pollution resulting from its metals surface processing."
Apple trails many other companies on environmental disclosure, too. It declined to participate in the Carbon Disclosure Projects Global 500 survey. Although Apple joins Akamai (Nasdaq: AKAM ) and eBay (Nasdaq: EBAY ) in disclosing greenhouse-gas emissions for data centers, Apple also relies on much-maligned coal for the majority of power in its North Carolina data center.
In fact, Apple's deal with Duke Energy (NYSE: DUK ) to run its data centers on a combination of coal and nuclear power led Greenpeace to name Apple the "least green" tech company earlier this year. Google (Nasdaq: GOOG ) , on the other hand, is making great strides in this area; Greenpeace lauded Google and Yahoo! (Nasdaq: YHOO ) as tops in its clean tech index.
Beyond brains and beauty
One of Apple's special and rather mystifying superpowers is its ability to protect its brand from the "corporate bad guy" reputation. Consumers seem incredibly forgiving of Apple's shakier practices; regardless, Apple's management should work hard to improve corporate responsibility because it's the right thing to do.
Being beautiful and smart are great, but they're not enough for my Rising Star portfolio. I'm on the lookout for companies that go out of their way to be good in many important ways as well. Given some of Apple's negative attributes in supplier and environmental practices, I'm leaving the iEmpire for other investors.