Apple Computer and Electronic Waste

PROPOSAL NO. 10 ON APPLE PROXY STATEMENT

As You Sow Foundation, Green Century Capital Management and other socially concerned investors have engaged Apple management in a dialogue on its computer recycling and electronic waste programs.

E-waste is a major environmental toxics issue. Approximately 40% of the heavy metals in US landfills, including lead, mercury and cadmium, come from discarded electronic equipment, according to the U.S. Environmental Protection Agency. Electronics represent the fastest growing portion of our waste stream – growing almost 3 times faster than our overall municipal waste stream. Between 315 and 600 million desktop and laptop computers in the U.S. will soon be obsolete, containing in total more than 1.2 billion pounds of lead.

While Apple is an industry leader in many ways, it falls far short of its peers in recycling and e-waste. This situation creates unnecessary risks, both for Apple and for the environment that we would like to see the company address.

As You Sow Foundation has filed a proposal with the company for the second year, asking it to develop a report on ways to improve its computer recycling management policies.

Apple’s e-waste recycling program suffers from a number of deficiencies:

• The company has declined repeated requests by shareholders to set public take back goals. Dell and HP have set public goals.
• Its free take back programs are limited to purchases at Apple stores and website. Purchases at other retailers do not provide the opportunity to recycle an old computer. Unlike Dell, Apple does not provide free recycling for all Apple computers.
• The company has not offered innovative free supplemental take back programs such as Dell’s pilot project with Goodwill Industries, and free take back offered by HP for several months in 2004 at Office Depot stores in which 10 million pounds were recovered.
• Its public reporting is inferior to competitors.
• Its systems are not based on the principle of extended producer responsibility.

These consumer-based disposal fees do not reward manufacturers for making their products easier to recycle or dispose of. To the contrary, they reward generic manufacturers who use the cheapest parts possible, without regard for disposal. In the long term, the policies that Apple is advocating can actually hurt companies that have strong competencies in design, manufacturing, and distribution, in other words, companies such as Apple.

Less than 10% of discarded computers are currently recycled. Those that are recycled are often handled by firms that do not operate under sufficient environmental controls and worker safety protections.

Dell Computer and HP have largely faced the issue of e-waste head-on, and in doing so they have turned a potential liability into a market opportunity. Both have set public goals for e-waste collection and have implemented a variety of programs to increase awareness and make e-waste recycling more convenient for consumers and businesses. In doing this they have helped their customers and the environment, and built their brand image.

These shortcomings put Apple at risk of damage to its brand. Perhaps more importantly, they represent a failure to take advantage of significant opportunities. More than any other company, Apple has an incentive to get people to bring in their old computers and switch them for new ones. Apple is the only computer manufacturer in the US with a nationwide network of retail stores that could facilitate recycling while building retail traffic.

For all of these reasons, as long-term shareholders in Apple Computer we believe that shareholders should support our proposal asking the company to report, at reasonable cost, studying ways to improve its computer recycling programs, to be released within six months of the annual shareholder meeting.

PLEASE VOTE FOR PROPOSAL NO. 10 ON THE APPLE PROXY STATEMENT

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