Emerging Issues
Emerging Issues
Emerging issues, like all business issues, move through a business opportunities life cycle. Dell has issues in all phases of this life cycle, each with a different focus, resource allocation and priority.
As shared in our fiscal year 2009 corporate responsibility report, Dell is continuing its efforts in the following:
• Supplier Environmental Responsibility (formerly known as Global Citizenship) (Phase: Executing)
• HIV and AIDS (Phase: Planning)
• Mining/extractions (Phase: Emerging)
• Nanomaterials (Phase: Emerging)
• Retail (Phase: Emerging)
Supplier Environmental Responsibility
Supplier Environmental Responsibility potentially presents our greatest opportunity in calendar year 2009. In fiscal year 2007 we implemented the Electronic Industry Code of Conduct (EICC) and asked our supply chain to meet aggressive targets. For example, in fiscal year 2008, we challenged our Tier 1 suppliers to report on their carbon footprint and participate in the Carbon Disclosure Project (CDP). We also requested our Tier 1 suppliers to cascade the EICC Code to their suppliers. The Code covers topics spanning labor, health and safety, environmental, management systems and ethics. Dell asks every supplier to become a signatory to the EICC since it’s now incorporated as part of the Master Purchase Agreement.
We face significant challenges in our continued efforts to align the supply chain with our Supplier Environmental Responsibility principles and the EICC Code. These challenges include price pressure by manufacturers (including Dell), host governments that are managing rapid market growth and migrant workers who move from region to region. These realities affect all electronics industry leaders who are promoting supplier environmental responsibility.
In our continuing efforts to create dialogue with our suppliers, Dell held two workshops in China with Tier 1 and Tier 2 suppliers. More than 35 suppliers attended. Both workshops consisted of collaboration among suppliers, training and contract labor law updates. The May 2008 workshop in Shenzhen also included a session on effective management and worker communication. The October 2008 workshop in Shanghai included a session on positive work environments, with topics such as discipline, grievance and anti-harassment system management.
Global HIV and AIDS Awareness
For many of us, the reality of AIDS is portrayed only on the big screen, but this life-threatening disease is the harsh reality for millions of people around the world. Striking from Manhattan to Mumbai — with a prevailing presence in Africa — this disease has no prejudice. Recognizing the tragic impact of HIV and AIDS on our employees, communities, customers, suppliers and stakeholders, Dell — together with the Global Business Coalition— has made it a priority to provide access to medication and education
We renewed our membership with the Global Business Coalition, and we added a walk-in wellness center, which offers HIV testing, at the corporate offices in Round Rock, Texas. We continue to evaluate our HIV strategy, how it impacts the communities where we live and work, as well as how Dell might best educate our employees about this deadly disease.
Dell is continuing its partnership with (PRODUCT)RED™ in the fight against AIDS in Africa through a multi-year commitment. Partners create (PRODUCT)RED branded items and services, contributing a portion of the profits to the Global Fund. The Global Fund uses 100 percent of this money to finance HIV health and community support programs in Africa, with a focus on women and children. So far, (PRODUCT)RED products and events have generated more than $125 million — enough to provide more than 760,000 people with life-saving medication for one year.
Addressing Minerals and Extractives
The Democratic Republic of Congo holds vast resources of minerals, and many of the mines are controlled by parties that are causing serious issues in the region. The conflict focuses on the mineral-rich areas of tantalum, tin, gold and cobalt. Currently there isn’t a reliable verification of conflict-free minerals. The electronics industry is essentially a small consumer of metals. However, some materials (such as cobalt in rechargeable batteries), when viewed holistically across all relevant industries, are used in meaningful volumes. Dell’s finished-goods manufacturing operations are many steps removed from the extraction, refining and trading of these materials. This means that companies such as ours have limited influence over the social and environmental practices in metal-extraction operations. Our ability to make improvements in these areas is most effective when we engage with our supply chain and when we partner with other industries to act as a single force.
Although this is a challenge where we don’t have a direct line of sight to the solution, we’re committed to being part of the industry-wide effort that is working toward a solution.
To this regard, Dell has implemented strategies to build awareness within our supplier chain:
- Sending letters to our suppliers requesting their assistance in helping us address this challenge
- Increasing the level of management review and oversight of this issue at Dell
- Continuing to work on this issue with our peers in the EICC
Our purpose is not to employ bans or embargos, but to help our suppliers better understand the situation in this region and to ultimately purchase from responsible sources.
Nanomaterials
Nanotech, a relatively new form of material science, refers to engineering at the molecular level to create substances with unique structural, electronic or magnetic properties. Uses for these materials range widely from high-performance electronic device applications to improvements in everyday products such as sunscreen, food packaging and stain-proof fabrics. Medical uses such as antimicrobials and drug release agents are also emerging.
“Nano” means one thousand-millionth. Thus, one nanometer (nm) is one thousand-millionth of a meter. Nanomaterials are usually considered to have dimensions in the range of 1 to 200 nm. They can be described in one dimension (coatings), two dimensions (nanowires and nanotubes) or three dimensions (nanoparticles).
In March 2008 the U.K. Department for Environment, Food and Rural Affairs launched a voluntary program to solicit information on nanoscale materials that:
- Are engineered (that is, not natural or unintentional by-products of other processes)
- Have two or more dimensions less than 200 nm
- Are free particles at any stage in a product’s life cycle
The data will be used to collect evidence of potential risks, specifically to:
- Compile a catalog of nanomaterials being manufactured, handled and marketed
- Draw comparisons of potential risks with prior findings
- Advise appropriate controls
Balancing the enormous societal benefit of this emerging technology with proper control of potential risks to health, safety and the environment is important. Consistent with our precautionary approach to chemicals management, we consider free nanoparticles to be a potential substance of concern.
Nanotechnology’s potential for risk has been widely considered both for current and future applications. However, a lack of consistent data assembled to date has resulted in a largely qualitative risk assessment. Dell continues to follow this important issue closely, and supports the principles of the European Union’s Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) to advance public health and safety and to protect the environment.
New Sales Channel: Retail
One critical area of growth for Dell in fiscal year 2009 was the growth of Consumer Retail sales. We have long prided ourselves on direct customer relationships — a tag line for Dell’s business for many years has been “Be Direct.” A core belief is that we can ensure the best possible customer experience through a direct customer relationship, which we have done through phone and online sales since Dell’s inception. The direct model was a revolution. But it is not a religion.
Some consumers told us that they want other avenues to purchase Dell products. We listened, and in May 2007, Dell announced that Dell consumer products would be available in retail stores around the globe. In the past several months Dell has announced relationships with retailers in the U.S., Europe, Asia-Pacific/Japan and Latin America, and our products are currently available in thousands of retail stores worldwide.
Augmenting our direct business model to include consumer retail, however, will likely add impacts to the carbon footprint of Dell products distributed through this channel. Dell believes that a direct relationship with a customer has fewer steps from the supply chain to the customer, resulting in lower carbon emissions.
Retail adds steps between manufacturing and the customer, potentially adding carbon emissions of transportation from Dell to a retail store (and possibly to a distribution center before the store) as well as for customers traveling to the store. Additionally, retail facilities (distribution centers, stores) use operational energy (construction resources and “keep the lights on” resources), all of which become part of the carbon footprint of every product in the store.
Dell is taking steps to quantify these impacts. We took the first step in understanding our upstream impacts by setting expectations for our primary suppliers to report their carbon emissions. As we look downstream in the supply chain, we will seek to understand additional retail carbon impacts and will work with our retailers to minimize these.