
The consumer electronics industry manufactures and sells the electronic products (phones, laptops, TVs) that we each use in our everyday lives and each of these products has an upstream and downstream carbon footprint that needs to be accounted for by the companies that manufacture and sell the products.
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Our analysis has uncovered some surprising results when we compare the disclosed emissions of the leading companies in this sector. Let's dig deeper!
We found a surprisingly weak correlation between the 2022 reported revenues of each company and their 2022 reported emissions
Samsung is the only company with a large amount of reported Scope 1 and 2 and this reflects the fact that Samsung is more vertically integrated than the many of the other companies (meaning that it still owns and controls much of its manufacturing capacity). Many of the other companies in this industry have chosen to outsource the bulk of their manufacturing capacity meaning that the vast majority of their manufacturing emissions are accounted for in Scope 3. Samsung has roughly 270,000 employees while Apple has 150,000 employees reflecting the fact that Apple outsources more.
In the post below, we dig deeper into the Scope 3 numbers to understand what is driving the above differences. You can also listen to Barrie talk through the analysis in colorful detail in the video below:
Scope 3 emissions breakdown
As you will have noted above, Scope 3 dominates the emissions profile of Consumer Electronics companies, so a natural next step is to drill further into the Scope 3 breakdown. As we see below, two sub categories of Scope 3 dominate:
Apple vs Samsung side-by-side Scope 3 comparison
We now understand that a couple of key Scope3 sub-categories drive the numbers for this industry so let's take a look at those categories for Samsung vs Apple to see if we can explain the differences in their numbers.
As a quick reminder, Apple is a bigger company than Samsung in terms of revenue so the below reported emissions are not immediately intuitive:
What products do these companies manufacture and sell?
While Apple has more revenue, Samsung is a slightly larger company in terms of the volume of products that they sell. Here is a 2022 snapshot of units sold for their major devices:
Device | Apple (MM units sold) | Samsung (MM units sold) |
Phones | 231 | 259 |
Tablets | 60 | 30 |
Laptops | 22 | 20 |
TVs | 0 | 10 |
3.01 Purchased Goods & Services
The Purchased Goods & Services category is quite similar for these two companies with both of them reporting roughly 15 MM tonnes of CO2e. Our back-of-the-envelope analysis of this category based on the number of phones, laptops, TVs sold combined with some reputable LCA studies checks out with the above reported numbers.
3.11 Downstream Product Use
So this leaves us with one very large unresolved question. Why are the reported emissions for 3.11 Downstream Product Use for these two companies so different?
Well the answer to this question lies in the types of products these companies make and how their customers use them. The emissions in this category mainly related to the emissions associated with powering the devices during the lifetime of customer use.
The power consumption of these devices is partly driven by the screen-size of the device. Some quick LCA research shows that to power a mobile phone consumes something like 2kWh annually whereas to power a TV is more like 100 kWh and it can be a lot larger for large-screen TVs which are becoming increasingly fashionable with consumers. Samsung is one of the biggest players in the large-screen TV market and even manufactures cinema screens. Samsung also manufactures semiconductors which can be used in all manor of electronics device downstream.
So while we don't have enough data to say for sure that the above differences are justified, it is plausible that Samsung has larger Scope 3 emissions than Apple even though they have lower revenues.
On the topic of revenues, it is worth noting that Apple has one of the strongest brands in the western world and is able to charge customers more for products in the same category, so revenues are not always the fairest indicator for assessing a company's emissions. That's why we sometimes receive requests from clients to use alternative normalization metrics instead of revenue such as employee headcount. We appreciate that all normalization metrics have their limitations so it is often a good idea to do it multiple different ways and compare the results.
What do you regulators think of peer benchmarking?
I have had the privilege of working inside a financial regulator when they receive regulatory submissions from a large number of reporting companies (back in my days working with Oliver Wyman). Regulators tend to make normalized comparisons of companies within an industry and naturally triage the submissions into "the good, the bad and the ugly". They are also known for sending nasty letters to those companies that haven't taken the exercise seriously which often end up in the public domain.
So the morale of today's story is that it is important for a reporting company to understand how they compare to peer companies from within their industry and to be able to explain the differences.
Our assurance team has aggregated and curated roughly 100 industry-specific peer datasets for this precise purpose which are available for download directly from this website.
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