HP’s sustainability strategy: promising signs but challenges lie ahead

HP’s 2023 Sustainability Impact Report makes for interesting reading. Like the ESG (Environment, Social, Governance) reports of its peers, HP’s latest update explains how it intends to become the most sustainable technology company around, declaring a strong ethics-based focus on the topics of climate, human rights and digital equity.

ESG reports have become a key component of annual corporate reporting. As more ethically minded investors seek companies with greater sustainable and social governance, they’re critical for reassuring stakeholders that strategies and expectations align.

HP’s 2023 report is 1,000% larger than its 2022 publication, making it the most sizable of the major tech ESGs, but volume doesn’t hide the quantitative data. We’re going to focus on two key areas of environmental sustainability: emissions and circularity.

Note that our write-up has criticisms: there are strong areas but also others where HP must improve. We write this as a “critical friend”, one that is urging HP to continue its good work but also focus on areas where it is falling behind its own targets.

Did HP hit its emissions targets for 2023?

In 2023, HP has stuck to its ambitious target of achieve net zero by 2040, stepping to a 65% reduction in 2015 Scope 1 and Scope 2 GHG emission by 2025.

Scope 1 emissions: Anything which HP generates itself.

Scope 2 emissions: Anything HP makes indirectly, for example from the energy it buys to power its business.

Even for small companies, it cannot be overstated how challenging a true net zero will be to achieve. HP’s headline figure shows that in 2023 it achieved a 27% reduction (from 2019) GHG emissions with an impressive 39% reduction in energy use, but a dig around the details reveals a more nuanced picture.

The ESG states that 63% of HP’s emissions occur within its supply chain – but that doesn’t account for the rise of Scope 1 emissions in HP sites across the globe.

There have been sharp rises, to beyond 2021 levels, in CO2 and PFCs (Perfluorocarbons) and annual rises in emissions due to refrigerants, transport and natural gas usage. Scope 2 emissions are down in Europe and Asia, but have seen a broad rise in the Americas.

HP may be able to calculate a 27% reduction from 2019’s levels, but that’s only a year-on-year decrease of 3%. This is still progress, but HP will need to be diligent and reverse increasing emissions.

Repair, reuse and recycle

HP is aware of the environmental impact of its business and is making the right noises in terms of circularity. It states a desire to keep materials in use for longer, preventing them from becoming e-waste, and also recognises the importance of eco-design and repair. (Although it could improve on the latter two, as we cover below.)

The reports shines a spotlight onto the HP Innovation and Recycling Centre in São Paulo, Brazil, which collected over 2,000 tonnes of electronic waste in 2023. These recovered materials go straight back into HP’s supply chain to reduce the need for virgin materials.

The ESG states that HP is collaborating with 40 waste-collection co-operatives in São Paulo to not only increase the pool of recycled resources but to promote decent working conditions through stakeholder engagement and assessment. In 2023, HP and its partners supported over 1,360 workers, over 55% of them women.

HP’s plastic challenges

Initiatives like these fuel HP’s desire to increase the amount of recycled content within the products we buy. 34,400 tonnes of post-consumer recycled plastic was used by HP in 2023, which is around 18% of its overall plastic use.

This is only a 2,200 tonne increase from 2022 (15% overall) so HP’s 2025 goal of 30% PCR is going to be extremely challenging, especially for a firm that is so reliant on plastic to build products and consumables.

Let’s put that into numbers. Since 2006, HP has produced over 5.8 billion printer cartridges. Although many of HP’s ink and toner cartridges contain varying quantities of PCR, HP’s report makes no mention of plastic-free alternatives to its cartridges. PCR plastic reduces the need to use virgin plastic, but the long-term issues of plastic pollution remain.

Similarly, HP has a goal to reduce single-use plastic packaging by 75% (compared to 2018; we would encourage HP to improve its transparency by using the same baselines). In 2023, it hit 62%, which is 85 grams/unit, only a 14 gram/unit reduction since 2022. By 2025, this needs to reduce another 29 grams/unit to hit the goal.

HP and iFixit

HP is proud of its designing for repairability program and claims to implement robust consumer and commercial repair programs around the world. It highlights a collaborative pilot with iFixit where repair guides and spare parts are available for six HP laptops.

Whilst this is certainly a welcome endeavour, we feel it lacks the commitment from HP to make it an attractive proposition. In the main, the only three parts which are available for these devices are the battery, fan and SSD.

What’s more, the parts are expensive. For example, a 256GB SSD is currently listed for $104.99, which is around three times the RRP (see the screenshot below).

Repair and recycle

To determine how easy its PCs are to repair, HP’s use a Serviceability Scorecard.

New designs score across six categories, such as ease of disassembly and tool requirements. Sadly this information isn’t made public like the French Repair Index. HP isn’t the only firm that promotes a concept of designing for repair but reduces the message to lip-service by restricting information and setting outrageous prices.

There are, again, some good moves. It offers refurbished devices to help drive circularity by giving customers alternatives to buying new. HP refurbished notebooks are currently available in France and the United States, but it plans to expand this in 2024 and beyond.

To promote reuse, HP has tweaked its Planet Partner program to adjust minimum collection thresholds. And HP can now collect devices for recycling from over 67 countries.

This is a great reminder to anyone reading that it is imperative that your end-of-life equipment gets back to the manufacturers (where possible) for recycling. Consumers and commercial HP users have various free recycling options for used equipment, so take advantage of it.

HP’s goal is to recycle 1.2 million tonnes of hardware and supplies by 2025, starting from 2016, and it looks to be on track to hit the target. This is great news.

Who is driving HP’s sustainability policy?

HP’s sustainably impact strategy is overseen by its Nominating, Governance & Social Responsibility Committee (NGSRC), which makes suggestions to the board at least four times a year. HP states that the majority of NGSRC have relevant experience, but it’s also interesting to note that the committee is chaired by board director Kim Rucker.

Rucker is vastly experienced and respected within the corporate world, currently serving on multiple boards. However, one of those boards is Marathon Petroleum. It operates 13 oil refineries that process almost three million barrels of crude per day. Is this the right message for HP to be sending?

Someone with relevant experience in corporate sustainability is HP’s Chief Sustainability Officer, James McCall. However, he is neither on the board or part of the second tier executive leadership team.

It’s worth considering that, like Dell, HP’s executive culture doesn’t appear to think that sustainability is worthy of board-level or C-suite status. In comparison, Logitech’s CEO Prakash Arunkundrum drives its environmental and sustainability initiatives from the top of the company, tagging eco success or failure into its annual bonus plan for the entire group management team.

See HP, that’s how you do it!

HP’s sustainability grading: C-

From an environmental perspective, HP’s 2023 sustainability impact report is a challenging read. It has ambitious goals for emissions by 2040, but the 2025 key marker is fast approaching and the numbers aren’t where they need to be.

There are good signs. In terms of production, it’s encouraging to see plans to increase HP’s refurb offering and while there are some good PCR figures, these aren’t universal.

At the very least, a company the size of HP should have a sustainable-focussed range akin to Acer’s Vero which will allow buyers to range-target and make informed choices.

Overall, then, HP’s sustainability grading is a C-. This ESG lacks ambition and HP’s boardroom needs to rethink its sustainability strategy.