HP proves being green makes good business sense
From product and packaging design, to manufacturing and the supply chain, to recycling programs and marketing, HP uses green initiatives to cut costs and gain market share.
In 2007, Hewlett-Packard (HP) became the world’s largest technology company, with $91.7 billion in revenue. But the Palo Alto, Calif.-based giant seems just as determined to gain recognition as one of the greenest companies around. The company set a bold goal to cut its energy consumption by 20 percent in the next few years, and plans to expand its extensive equipment recycling and reuse programs. No wonder Fortune magazine recently named it one of “10 green giants.”
HP sees its green efforts not just as fodder for the annual report, but as critical to various parts of its diverse business, including hardware and IT services. From product and packaging design, to manufacturing and the supply chain, to recycling programs and marketing, HP uses green initiatives to cut costs and gain market share. Further,
It’s not always easy to differentiate between HP’s environmental commitment and its business strategy. Indeed, as CEO Mark Hurd says, it’s the “hidden component in HP products, embedded in our design and engineering.” As for IT services, Hurd adds, “The price and performance of IT are no longer compromised by being green, but are now enhanced by it.”
Greener products meet customer needs
“Green issues have really come to the fore, and both individual consumers and businesses increasingly want to buy from companies
HP has maintained Design for Environment (DfE) guidelines since 1992. This program sets the standard for product design, packaging, and transportation. The idea is to minimize the use of both materials and energy at every step of the product life cycle. In product design, that means not painting materials, designing products for easier disassembly, and marking all the plastics for easier sorting during the recycling or “takeback” process.
This summer, HP released the HP rp5700 Long Lifecycle Business Desktop PC , which can be made with up to 95-percent recycled components. Packaging is made with at least 25 percent recycled cardboard. Green Electronics Council , an industry group, these computers are the first to meet new certification requirements from the U.S. Environmental Protection Agency (EPA). Specifically, they are certified as “gold” on the Electronic Products Environmental Assessment Tool (EPEAT), which rates products on up to 50 environmentally related criteria, such as the use of hazardous materials, energy efficiency, and ease of recycling.
Standards like EPEAT and Energy Star 4.0 help HP maintain its considerable business with the U.S. government. A 2007 executive order mandates that 95 percent of the purchases of electronic products must be EPEAT-compliant.
“We want to help the U.S. government meet its green procurement ambitions, just like we want to help all of our customers meet their goals,” says Glazer.
The cost-benefit balancing act
Joseph Martha, a VP with Booz Allen Hamilton ,as they try to take a holistic view,” he says. “In most cases, there’s a clear link between ‘lean’ and ‘green.’ ”
Martha has seen many manufacturers profit from sustainability programs, from a consumer packaged goods company that saved $44 million on corrugated packaging, to a heavy equipment manufacturer that found a $10-billion market in recycling and remanufacturing, to an energy efficiency audit at an aluminum extrusion plant that yielded $2 million in annual savings.
“There’s plenty of low-hanging fruit where companies can realize pretty significant gains quickly,” says Martha, who cites “smart lighting”
The outcomes of cost-benefit analysis can be surprising. HP, for instance, chose to replace the wood pallets it used for shipping notebook computers to pallets made from lightweight plastic. “Most people would think wood is the‘greener’ choice, but in our case, the wood was low-quality and often ended up in the trash,” says Glazer. “The plastic pallets were tougher, so they lasted longer; and are lighter, so we use less fuel in shipping. Plus, they’re recyclable.”
In shrinking the size of the boxes of its popular printer cartridges and using recycled cardboard and plastic, HP again found plenty of overlap between green and business goals. According to estimates, the company saved on the direct cost of 15 million pounds of material and also reduced transportation costs, since more cartridges can fit on shipping palettes.
When Europe’s RoHS regulations, which govern the use of potentially hazardous substances, came into effect, HP made the decision to voluntarily apply the standards worldwide. “It took a lot of discussion and some analysis of materials costs and supplier constraints during the transition period, but it was the right thing to do,” says Glazer.
The decision simplified the supply chain and gave HP more flexibility around where and when products could be made. Glazer believes HP and its manufacturing partners actually saved money, though she acknowledges the exact amount of those savings, particularly those at the plant level, are difficult to quantify. “There are some tough choices to make, but the risks and rewards aren’t always what they first appear,”she adds.
Recycling is a huge part of HP’s green story. In 2007, the company reached an important milestone in the U.S., processing its one-billionth pound of recycled materials. It took roughly a decade to get there, but HP expects to process another billion by 2010.
“We’ve developed a very sophisticated set of processes and relationships to support recycling and asset recovery operations,”notes Glazer.
Overall, HP offers recycling in 40 countries worldwide. It also incorporates “takeback” and asset-recovery programs into large-scale corporate leasing deals.