HP 2010 Sustainability Performance Report - a mixed bag

HP sustainability reports are always a meaty read which provide an interesting insight on the performance and impact of one of the world's largest tech companies. 2010 marks HP's 10th annual report and while it doesn't disappoint as an interesting read it does cause pause for both admiration and concern in almost equal measure.

First the good news:

• HP delivers 2.5% reduction in energy consumption and 9% reduction in greenhouse gas emissions from direct operations. The improvements were driven by efficiencies associated with the EDS integration, other corporate initiatives and the purchase of green credits. Frustratingly though, HP is unable to report 2010 supplier manufacturing energy and greenhouse gas data and existing estimates for this and transportation appear to be just this - estimates.  HP have had really stellar results in their operating performance but we really have no idea if the carbon & energy savings have just been merely displaced elsewhere on the value chain. HP also reported that the Carbon Disclosure Project had marked down its score in the CDP leader index to 66% from 89% the prior year.

As a general comment appropriate to all environmental reporting these days - it really is high time some form of causal factor analysis is provided to reveal the true underlying sustainability performance once volume and other non performance variance factors have been stripped away.

• Green products - HP achieved and exceeded its goal to reduce energy consumption of its products to 25% below 2005 levels by 2010. In fact HP has achieved a 35% reduction below 2005 levels and is striving to reach 40% in 2011.
• HP has now declared its notebook range as PVC and BFR free. This will go some way to avoidance of another building invasion by Greenpeace. Still HP could still be heading for another round in the ring with activitsts with its revised forecast of its target to achieve total elimination in 2011 on track but only for 90% achievement.
• The Tech gallery is awesome! At last anyone reading the report can browse the product offerings and understand how HP technology can enable sustainability performance. Its a great addition on the 10th anniversary though maybe 10 years late already.
• Conflict minerals - this is more of a neutral comment rather than positive or negative comment. On the one hand HP does a great job of explaining the issue of how minerals extracted in war torn regions of the Democratic Republic Congo lead to the financing of a pretty brutal civil war & human rights abuses inherent in the mining labor conditions. HP is supporting recent SEC regulation requiring due diligence whilst bemoaning the complexity of third tier supply chain verification. Meanwhile HP has not set itself any voluntary targets for elimination of the conflict minerals from its products. This adds up to a risk of HP taking a tick box approach to futile supplier verifications when perhaps a more muscular approach to conflict mineral removal is what is appropriate. After all, HP was able to do so for mercury, PVC and BFRs so why not conflict minerals? 

Now the not so hot news:

• Investment in social innovation does not seem to be keeping pace with the rest of the business which reduces HP's ability to showcase its technology and inspire on how technology can change the world. For instance, technology donations collapsed by a whopping 50% in 2010 and yet cash donations increased by 23%. Finding the ways and means to distribute technology, provide after donation support and monitoring is more challenging than writing a fat check but its the most relevant and appropriate social intervention HP can make.
• Rate of supplier ethics audit has declined 29% since 2008 but HP reports that excessive working hours at supplier facilities remains a high concern. With the intensification of supplier engagement and the additional publicity associated with key HP supplier Foxconn one might expect supplier ethical audit activity to increase rather than shrink.  At a rate of just 92 audits a year it will be difficult for HP to stay abreast of manufacturing labor issues let alone start to get to grips with the emerging issue of conflict resources.
• Supplier transparency - as previously posted here HP is to be applauded for publishing a list of suppliers. But prioritizing transparency by spend volume rather than risk rather missed the point for the needed transparency. For example, HP publishes a case study on its remedial work to help Foxconn improve its performance yet Foxconn does not appear on the list of strategic suppliers published. This picture has become more muddied over time. When HP first started publishing its supplier details in 2007 it said that its list represented 95% of spend but just 25% of suppliers. We are no longer told what percentage of suppliers are declared and whether they are high risk or not but somehow I doubt if listed Intel, Microsoft, Seagate or Sony are deemed high risk on social responsibility.

As CEO Leo Apotheker points out in his introduction, HP is a formidable giant of sustainability enablement as the largest IT company in the world. He humbly muses:

Our strategy is to use our portfolio and expertise to tackle complex issues—such as improving energy efficiency, enhancing the quality and accessibility of education, and making health care more affordable, accessible, and effective. We approach these issues in a holistic way, stretching beyond quick fixes and piecemeal solutions.

And yet HP can be accused of sometimes hiding its light under a bushell. My old friend Tom Raftery recently had this to say:

HP has a messaging problem around Sustainability. It isn't that they don’t do Sustainability, it is just that they seem to be shy about talking about it. With the rise and rise of ethical consumerism, this shrinking wallflower attitude may not be Sustainable!

Top sustainability analyst firm Verdantix said similar in January when they accused HP amongst others of 'green muting' and predicted the power of information pull would leave the likes of HP no choice but to wrestle control of their own sustainability performance story or risk having others define it for them.

HP is a big beast and is performing reasonably well on sustainability but is it leading from the front?

My colleague Heather Clancy has more on HP's sustainability report here.