External verification

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ERM-West, Inc. (ERM) was contracted by Hewlett-Packard Company (HP) to conduct an independent review and verification of the reuse and recycling metrics published in the company’s Global Citizenship Report (GCR), the observations and conclusions of which are summarized below.

The HP recycling and reuse programs cover all major geographic market regions and the majority of product categories, and demonstrate continued growth and expansion. The systems and processes in place to track and report data from these programs for input into the GCR appear systematic, repeatable and rigorous. Clear distinction is made between reuse and recycling data to avoid double counting, and there is internal awareness of actual and potential sources and margins of error¹ in the data. On this basis, the metrics reported in the Global Citizenship Report are credible and defensible. Providing verification, per se, of the metrics is, however, a challenge at present for the following reasons:

• Limited visibility into the final disposition of recycled material (visibility ends at the first-tier vendors), a foundational requirement for verifying reported recycling data. This should be remedied as an issue by improvements planned for the recycling Vendor Assessment Program.
  
• Limited visibility into data collection processes prior to 2003/2004 (with the exception of Supplies) due to historical mergers and acquisitions, and employee turnover, coupled with the relatively informal nature of the reporting network. Documenting the existing reporting organization and the respective processes for tracking and reporting the data, and keeping this information up to date, would provide a basis for future internal or external evaluation and verification purposes.
  
• Margins of error, most notably in EMEA, which reports the largest recycling volume, together with the highest margin of expected error. Recycling vendors in the European Union do not furnish producer brands like HP with tonnage of material recycled by brand, and information from various vendors is a mix of calendar and fiscal year. As a result HP must rely on several extrapolations and projections to estimate HP recycling metrics for the EU. These may diminish as issues with further implementation of the European Recycling Platform across the region, from which partner brands should be able to extract more timely and detailed information, and as recyclers respond to pressures from producers to provide more granular information.
  

Beyond data verification challenges, a consideration may be to exclude products that are returned within 30 to 90 days of initial sale from the reported reuse figures in order to avoid potential challenges from parties who perceive "reuse" to be equated with products at the end of their useful life.

Finally, a subset of the interviews conducted for the purposes of this review uncovered possible gaps in internal HP recycling programs that, if confirmed, may represent opportunities for improving the extent of material recycled from the company's own facilities and offices. Specific concerns raised by interviewees referred to: possible awareness gaps among some HP employees of the company’s recycling policies and processes, a few of the smaller HP sites not being included in the company’s system for tracking electronic waste recycled, and the exclusion of some of the more remote premises from the recycling program due to logistical challenges.

[It is noted that the majority of issues summarized above confirm HP’s own observations made independently of this review].

Note: The independent review was carried out between January and April, 2007. This statement also appeared in HP’s GCR for FY06.

¹ A margin of error is anticipated as inherent to reported metrics, especially in a program of this nature, scale and complexity. Sources of error include calibration errors and projection errors. Calibration errors are usually small, routine elements of any data collection and reporting processes that rely on weight data from multiple sources (logistics providers and recycling vendors, in this case). Projection errors can also comprise routine elements of reported figures that rely on forecasting.