HP, Apple Show Strong Leadership on Supply Chain Transparency

As 2011 rapidly shapes up to become The Year of Supply Chain Sustainability, few industries better illustrate the challenges and opportunities presented by the issue than IT.

Prodded by looming legislation to rapidly get up to speed on where and how their materials are sourced, IT firms are now leading the pack in reporting the social and/or environmental performance of their supply chains at granular levels of detail.

At least, some of the are.

That's according to a study published today of 26 IT companies by Det Norsk Veritas (DNV), where four firms -- HP, Apple, Intel and Motorola -- are ranked the best firms managing their supply chains for social, environmental and "emerging issues" areas.

report coverThe study looked at 26 companies in the IT industry, each of which submitted Global Reporting Initiative (GRI)-compliant sustainability reports detailing their supply chain activity. Fourteen of those companies were members of the Electronics Industry Citizenship Coalition (EICC), an industry trade group dedicated to social and environmental responsibility.

Companies earned a score ranging from one to six across social, environmental and emerging issues areas (which for the IT industry can be shorthanded to the ongoing conflict minerals discussion) in five management categories: Management Approach, Risk Management, Monitoring, Performance Reporting and Engagement.

A maximum score of 90 was possible; the average score was 39.1, while the four leading firms scored dramatically higher: HP led the pack with 76, Apple with 73, Intel with 71, and Motorola with 63.

DNV's report does not include full rankings -- simply a general breakdown of how many companies earned high, middle or low scores -- because these firms are already among the leaders in the industry simply by their participation in GRI-compliant sustainability reporting. Instead, this report is intended as a way to help companies across any industry get up to speed on supply chain management issues.

"We hope to encourage all companies to thoughtfully and intentionally develop a supplier reporting strategy that considers sustainability criteria material to their supply chain operations," Natasha D'Silva, a consultant in DNV's Sustainability and Innovation practice, explained in an email interview. "As such, we are excited to engage in conversations with the companies themselves about their strengths and where specific opportunities for improvement lie in their supply chain reporting, but we will not be publicly releasing the scores of each company."

The report offers three top-level findings:

  1. The highest scores achieved in Social performance dimension and lowest scores in Emerging Issues / Conflict Minerals.
  2. Performance Reporting is the management strategy element with greatest potential for improvement, whereas Management Approach is the element with which companies are most comfortable.
  3. EICC members, on average, scored significantly higher than non-members

It's perhaps unsurprising that emerging issues remain the least-addressed. But with the Dodd-Frank financial reform bill about to go into effect, with its requirement that all companies certify that they're not sourcing "conflict minerals" from the war-torn Democratic Republic of Congo, these emerging issues will move front-and-center very soon.

Next page: Five recommendations for any company to get up to speed.