Product manufacturing

HP has long recognized the importance of energy efficiency in our own operations and in product performance, and we have now widened the focus to include suppliers.

HP’s strategy is to encourage major suppliers to improve energy efficiency and increase use of renewable energy sources. This will reduce their operating costs and their potential exposure to carbon pricing, and will help mitigate volatility of energy supply. The program is being implemented through supplier engagement, reporting greenhouse gas (GHG) emissions, establishing reduction targets and building suppliers’ capability in this area. We are asking our largest suppliers to engage their own first tier suppliers in the same way.

We have expanded carbon accounting beyond our own operations. After becoming the first major IT company to publish aggregated supply chain GHG emissions in 2008, we have continued working with suppliers, establishing expectations about energy efficiency in their operations.

We received responses on energy use and GHG emissions in product manufacturing for 2008 from suppliers representing 86 percent of our material and manufacturing spend (up from 81 percent for 2007). Aggregate carbon dioxide equivalent (CO₂e) emissions were 4.1 million metric tonnes, which is more than twice the emissions from our own operations. This is not directly comparable to the 2007 figure of 3.5 million tonnes CO₂e because it covers 5 percent more of our spending and because HP’s revenues have increased 13.5 percent during the period.

Our suppliers have become increasingly committed to reducing energy and emissions. The number of suppliers calculating and disclosing their emissions increased by a third, two-thirds of suppliers reporting to HP have established GHG reduction goals, and about a fifth are estimating the emissions of their own suppliers.

Calculating emissions

Many factories supplying HP also supply other electronics brands, so it is impractical to measure the energy used to make HP products separately from our suppliers’ other business. Therefore, we allocate HP’s share of their energy consumption in proportion to the value of our business in our suppliers’ annual revenue. This method has its limitations, and we will continue to work with suppliers to improve data quality.

We are also working more broadly to better standardize tools and methodologies to facilitate consistent and reliable reporting among suppliers and enable a more robust process that could apply throughout HP’s supply chain. Activity includes:

• HP is co-lead of a working group in the Electronic Industry Citizenship Coalition (EICC) to build an online carbon reporting system that will make it easier for suppliers to measure and disclose their GHG emissions and will increase consistency in reporting. Since going live in June 2009, approximately 12 electronics companies have used it to request responses from over 300 suppliers.
• HP is also participating in a technical work group for the GHG Protocol Supply Chain Initiative (sponsored by the World Business Council for Sustainable Development and World Resources Institute). The group is developing a methodology for quantifying and reporting corporate “scope 3” GHG emissions. HP’s success in working with its suppliers to collect information about their GHG emissions and to establish GHG reduction goals was recognized by the World Resources Institute, which included HP’s results as the only company example in the guidance document provided to companies that are road-testing the draft GHG Protocol scope 3 standard in February 2010.¹

1. ¹ The World Resources Institute (WRI) defines scope 1, 2 and 3 greenhouse gas emissions in its Greenhouse Gas Protocol .