Sustainability reporting in tech companies – the hardware vs software divide

‘None of the other software companies seem to take sustainability reporting anywhere nearly as seriously as the hardware companies.’

hi tom
this was very useful. One explanation may be similar to the reason that extractive companies take reporting seriously – their industries are inherently unsustainable, old economy/pre-crisis relics. Hardware firms’ rely on diffuse supply chains, low cost manufacturing and many other unstable variables. Like extractives, they realise they could get pulled up on any number of issues and so need to report well (show me a mining company that isnt A+).

Also, the pressure just isnt there for software companies: e.g. 15th iteration of Greenpeace’s greener guide to electronics vs Cool IT leaderboard.

Wrote a post recently* about a smarter future for consumer electronics. When you take into account conflict materials, labour disputes in low-cost manufacturing centres, pressure on China to allow currency to appreciate, toxic materials, ewaste and social utility/happiness factor of prodcuts, the industry (perhaps like extractives?) seems in need of some serious innovation/structural change if it wants to secure its future.

Can anyone sense the disruptive opportunity?
*http://i-seeglobal.com/2010/07/04/satisfaction-footprinting-and-consumer-electronics/

@ Mehrdad Nezari

Fair point – my comment was a bit throwaway and your chart is indeed revealing. A few more layers to your chart would be great.
For example lets say you take the top 20/quartile by marcap – where do they sit?

on another note, re table above, a comparison i often find useful in benchmarking reports is to look at the vision/goal statements and ask yourself whether this is a generic statement (ie ‘we want to be the most sustainable …’) or whether it acts as a genuine lead for strategy.

Tom, your assessment raises an important point about sustainability and corporate responsibility reporting generally. There are a number of factors which drive a company’s level of comprehensiveness in reporting. The issue of risk disclosure is one issue that has already been identified, this can be unpacked to included materiality of environmental/social costs to the business, level of required regulatory compliance, and third, the demands from stakeholders – i.e. investors, customers & employees – for clear communications on sustainability performance. It is obvious why there is more pressure on hardware companies to report more comprehensively. This demand can also be enhanced by geo, as you’ll see the top 4 in your list are all European companies where arguably stakeholders are more demanding when it comes to sustainability reporting. Other business drivers which I think will shape this agenda over the next five years can be seen in this article – http://www.businessgreen.com/business-green/comment/2266283/five-forces-driving-corporate.

I would also say that maintaining high performance in corporate reporting can be difficult and that a company’s marketing budget without underlying structural changes can be to blame for peaks in reporting which cannot be sustained for more than a year or two. To ensure credibility in corporate sustainability performance reporting it is important to sustain a good level of performance for several years. If you look at the BT website they have Social & Environmental Reports dating back to 2001 and they have been setting the standard for sustainability reporting for many years. Likewise, Nokia have been producing a Corporate Responsibility report since 2002 and are known for their leadership in this space. This series of reports also shows the most important underlying trend and that is improvements in absolute environmental impact whilst allowing the businesses to remain competitive.