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April 09, 2003
Return to Sender: Dell Inches Toward a Computer Take-Back Recycling Program
    by William Baue

Calvert-led coalition conducts shareowner action urging U.S. computer companies to implement take-back programs for recycling obsolete computers and components.

What will become of the computer in front of you when it becomes obsolete? If it is an average computer, planned obsolescence has dropped its life expectancy from five years to two years, according to a 1999 National Safety Council (NSC) report. And if you are in the vast majority, you will not recycle it--only about eleven percent of computers are recycled, according to the NSC.

Even if you do recycle it, chances are high it will not be recycled properly. According to a report published last year by the Silicon Valley Toxics Coalition (SVTC) and the Basel Action Network (BAN), 50 to 80 percent of electronic waste (or e-waste) ends up in a developing country. There, it is not properly recycled but instead becomes a hazard to both the environment and the disassembly workers who may be exposed to its toxic components, which include lead, mercury, and arsenic.

Computer manufacturers have been slow to address the problem of computer recycling. Take-back programs represent one of the better solutions. In these programs, manufacturers take back computers in order to reclaim reusable components and properly recycle the rest.

The Calvert Group, along with a consortium of other socially responsible investment (SRI) firms and environmental advocacy organizations, has been conducting shareowner action urging computer companies to tackle the recycling problem. Yesterday, the coalition announced the signing of an agreement with Dell (ticker: DELL) to set global computer recycling and take-back performance goals. The coalition also includes Green Century Capital Management, Walden Asset Management, and As You Sow, a foundation that coordinates shareowner action.

"Dell has said that they will come up with recycling goals by March 2004. That's almost a year from now, which sounds like a long stretch of time, but we recognize that this issue requires some research and that there are some very legitimate technical hurdles to overcome to establish a corporate-wide benchmark," said Julie Frieder, an environment analyst with Calvert. "We're trying to be as reasonable as possible without being pushovers."

The agreement calls on Dell to establish and report quantitative recycling goals, track and publicly disclose the recycling chain, and verify that recycling vendors adhere to a no-export clause prohibiting the removal of recycling to developing countries. The agreement also calls for verification that Dell's U.S. recycling vendors comply with health and safety standards on par with U.S. Occupational Safety and Health Administration (OSHA) regulations.

"Dell has been the major focus of the computer take-back campaign because they are the sales leader but environmental laggard," said Ted Smith of SVTC. "This is a good first step and commits Dell to moving in the right direction, but the devil is in the details, and the agreement leaves out most of the details."

For example, the agreement does not address how the take-back program will be financed. The current system, which charges consumers between $13 and $34 to take back computers for recycling, serves as a significant disincentive.

"Dell only got 160,000 units back last year, and most of that, we understand, is from their corporate leasing, not from consumers," said Conrad McKeron, director of As You Sow's corporate social responsibility program.

Some critics consider it the responsibility of the computer producers, not consumers, to provide for the recycling of their products.

"We've got the price for recycling down to the lowest possible level at this point, which is $15," said Cathie Hargett, a Dell spokesperson. However, Ms. Hargett would not confirm whether Dell intends to take on all financial responsibility for the recycling of its products.

Dell is not the only company where the consortium is conducting shareowner action.

"In lieu of filing shareowner resolutions, we have been in a dialogue with IBM (IBM), HP (HWP), and Apple (AAPL), asking for a very similar set of commitments," Ms. Frieder told Dell's commitment puts pressure on other computer companies to enact similar initiatives in order to remain competitive. Such competitive advantage may become more of an issue in the near future.

"We're tracking other issues on the horizon, including what's happening in European legislation with the WEEE [Waste Electrical and Electronic Equipment] Directives," added Ms. Frieder.

In January, the European Union refined rules that require manufacturers to take back for recycling all electrical and electronics equipment they produce. Some critics have questioned why U.S. companies have not displayed more foresight in preparing for the implementation of these laws and the inevitable migration of similar initiatives across the Atlantic.

"What appears to be rather stark from our contact with U.S.-based EEE manufacturers is their nervous--and sometimes panicked--concern about the timelines for when the Directives kick in," said Dr. Harvey Stone, managing director of the GoodBye Chain Group, an early-stage company focusing on waste-as-resource solutions. "It's as if they waited a very long time before paying serious attention to the legislation."

"I do believe many of these companies will be at a competitive disadvantage when the legislation kicks in--they are likely to face fines, if not the stopping of product shipments," said Dr. Stone. "Depending on the extent of the penalties and the press implications, they could impact market share, revenues, earnings, and brand value."


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