Stakeholder Advisory Council

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	From top left: Stephen Frost, David Schilling, Ted Smith, Suzanne Apple, Peter Madden

HP’s Stakeholder Advisory Council (SAC) comprises NGO representatives and senior HP executives from our business units. The SAC provides HP with advice on current and emerging global citizenship issues. Its members’ feedback helps us to better anticipate and respond to business risks and leadership opportunities.

NGOs were carefully selected for the SAC based on their expertise and influence on environmental and social issues, their willingness to collaborate with HP, their geographic locations, and their reputation with government bodies and other stakeholders. NGO representatives on the SAC are:

• David Schilling, Interfaith Center on Corporate Responsibility (ICCR)
• Peter Madden, Forum for the Future (FftF)
• Stephen Frost, CSR Asia
• Suzanne Apple, World Wildlife Fund (WWF)
• Ted Smith, Electronics TakeBack Coalition (ETC)

The SAC meets twice a year. Its initial meetings were held in January and October 2007. The NGO members helped HP identify and prepare for potential business risks and provided advice on our leadership strategy for global citizenship.

At the meeting in January, the SAC focused on energy use and climate change. Recommendations included that HP position our work on energy efficiency as benefiting climate change more than simply saving energy, and that we begin to measure and reduce the climate impact of our supply chain.

In October, the group concentrated on supply chain responsibility. As a result of that meeting, we have increased transparency about our suppliers by disclosing a list of our top suppliers.

	Interview with HP’s Stakeholder Advisory Council

In late 2007, we interviewed the five external members of HP’s SAC. We asked them to comment on HP’s approach to global citizenship and on our performance in the three priority areas we’ve identified: supply chain responsibility, climate and energy, and product reuse and recycling. The text below summarizes their responses.

HP’s approach to global citizenship

Do you believe that global citizenship is integral to HP’s business strategy and creates value for the business?

The SAC members agreed that global citizenship is becoming more central to HP’s business and that there is a lot of activity in this area within the company.

“HP really has stepped out and done genuine stakeholder engagement, which helps formulate its global citizenship strategy.” —David Schilling (ICCR)

Participants noted that HP’s strategy is based on the belief that global citizenship creates financial value rather than simply satisfying charitable commitments. Members discussed how HP can better highlight evidence of this value in our report, perhaps by noting contracts in which environmental requirements were a factor or promoting the cost benefits of environmental stewardship. One member commented that HP does not effectively promote the environmental benefits of its products, and several members mentioned the opportunity for HP to take a greater leadership role in this area.

"We'd all like to see more visible leadership from Hewlett-Packard on this agenda. Only companies that really take this as a business agenda and get on top of it will prosper in the future." -Peter Madden (FftF)

Do you believe HP has taken the lead in global citizenship, or that it has simply reacted to pressure from customers and other stakeholders?

There was general agreement that HP has been a pioneer in its industry in many areas of global citizenship, and this has not been due to pressure from stakeholders alone.

"I would set the tone as not so much reacting to pressure, but responding to customer and other stakeholder expectations. I think that's really where HP is a leader." -David Schilling (ICCR)

"It has been impressive to work with the team specifically charged with global citizenship in the company. I see them pioneering in a lot of areas of their business." -Suzanne Apple (WWF)

SAC members said they regard HP as a leader across industries in some areas, such as its well-developed global citizenship strategy and programs, its stakeholder engagement and responsiveness, and its global citizenship reporting. There was agreement that HP’s progress in managing its supply chain responsibilities is less advanced than that of the apparel sector but at the forefront of the electronics industry. There was also a general sense that, while HP once led the industry in demonstrating producer responsibility and facilitating product take-back, it is now being challenged by competitors that are making progress in these areas.

"HP clearly was the leader in the United States until quite recently, but that leadership has slipped somewhat." -Ted Smith (ETC)

One member pointed out that use of language such as “leadership” should be supported with evidence of HP’s relative performance.

"My sense is that HP is in the leadership pack, but I wouldn't use the word leader. I'd like to see systematic benchmarking of HP and other players in the sector." -Peter Madden (FftF)

What opportunities and risks do you think global citizenship issues present for HP?

Several SAC members agreed that HP should better integrate global citizenship into its brand.

"There are lots of opportunities in terms of getting ahead of regulation and staying up with consumer demand to be a better brand than competitors." -Peter Madden (FftF)

Building HP’s brand in Asia was highlighted as a particular opportunity, because participants believed that demonstrating a commitment to those communities through stakeholder engagement will foster brand loyalty.

"There's an enormous opportunity to really build brand and demonstrate a commitment to Asian communities that would flow through to product loyalty. The risk is that HP's global citizenship is still very much focused on its U.S. stakeholders." -Stephen Frost (CSR Asia)

Members also raised the potential risk of making significant public commitments, raising stakeholder expectations and then being seen as not “walking the talk.”

"Companies not saying anything are not going to be held accountable to those pronouncements. In taking the lead, HP does put itself out there. If it doesn't follow through on messages in the United States and Europe into emerging markets, there's a risk of losing trust and commitment from people." -Stephen Frost (CSR Asia)

"The more a company puts forth that it really takes global citizenship seriously and wants to be a leader, it also raises stakeholder expectations." -David Schilling (ICCR)

Some members suggested that HP manages these risks well but does not communicate its efforts externally.

"I don't think over-promising and under-performing is a huge risk for HP because there are pieces being put in place to address that." -David Schilling (ICCR)

"HP is probably one of three or four companies that has taken a proactive stand on a really hot issue in China-discrimination against people with hepatitis B-and could get strong recognition for that. But I felt there was resistance in the company to saying anything about its work in this area." -Stephen Frost (CSR Asia)

The SAC advised HP to find the right balance between being realistic and stretching our commitments. This would enable stakeholders to appreciate our efforts while minimizing the risk of setting expectations too high and damaging HP’s reputation if some goals are not fully met.

What will it take to show leadership in this area in the future?

Participants offered a range of insights regarding what leadership in global citizenship will require moving forward.

"Working with others in ways that are visible." -Ted Smith (ETC)

"There's real potential to start thinking about how computer products and services contribute to the well-being of the world and the ability to make money from that." -Peter Madden (FftF)

"The vision developed at headquarters [needs to be] rolled out down through branch offices. I don't think any company is doing that particularly well at the moment, in Asia in particular. If you were to do this well, it would really set you apart." -Stephen Frost (CSR Asia)

"How do you get further down a supply chain and get ownership of the process? That is going to be a key leadership question for HP-to really flesh out what it means for a first-tier supplier to educate and train a second-tier supplier and so on down the chain." -David Schilling (ICCR)

	HP’s global citizenship priorities

Supply chain responsibility

The SAC members expressed their belief that HP is becoming more fully engaged with its stakeholders on supply chain issues. Several members mentioned that HP advocates change across the industry through the Electronics Industry Code of Conduct and engages with key stakeholders—including critics—to fully understand its supply chain responsibilities.

But members agreed that while HP leads the information technology industry in this area, several apparel companies have many more experienced people on site in key sourcing countries. Some apparel companies employ auditors with five to ten years of experience with factory issues. HP has strong leadership at the top of its supply chain program but little presence at the country level. Members also advised HP to build greater capacity within its wider supply chain:

"The toy and apparel companies compete against each other in the market but work together on corporate responsibility. Now is the time for HP to step up and play a role in building capability not just in its own supply chain, but also other stakeholders in the supply chain." -Stephen Frost (CSR Asia)

"The gap from where you are to where you need to be is enormous-there needs to be a massive training program for suppliers' employees and managers to ensure commitments are carried out on factory floors around the world. HP seems to be moving in that direction." -Ted Smith (ETC)

"We have made lots of comparisons with apparel and shoes and so on. But I think the complexity of HP's supply chain is an order of magnitude greater." -Peter Madden (FftF)

Climate and energy

Members acknowledged that HP has clear programs addressing the energy use of its products and operations and is working to meet its targets. But they said there is much more the company can do and encouraged us to be bold when talking about climate change.

"HP is being very deliberate in how it addresses energy efficiency, both in its own use and how its products use energy. There is a need to expand this to HP's supply chain, because that's where there is a huge footprint." -Suzanne Apple (WWF)

"HP has an incredible resource in its Labs to not only reduce energy consumption in the macro world of servers, but also in individual laptops." -Ted Smith (ETC)

Product reuse and recycling

There was agreement that other companies are making significant progress in this area and are closing the leadership gap HP created. HP made great early progress in establishing effective product reuse and recycling programs and maintains challenging goals in this area but, like the rest of the industry, has more to do.

"There is some debate about whether these are real initiatives at some of the other companies and whether HP is still in the lead, but HP is being outdone in the PR world." -Ted Smith (ETC)

"As long as the average PC has a lifetime of three years, we are going to generate enormous problems. HP has got to put some of its innovation into thinking about how to provide information and computing technology services in ways that do not have this kind of frantic product obsolescence going on." -Peter Madden (FftF)