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December 20, 2001
E-Waste Not, Calvert Says to Computer Companies
    by William Baue

The Calvert Group has filed shareowner resolutions with the major U.S. computer producers, urging them to investigate ways to counteract electronic waste.

As you read these lines on your computer, do you consider what will become of this mass of electronic circuitry and plastic casing once it has outlived its usefulness? And do you think about the number of environmentally hazardous materials that go into producing it? And even if you recycle it, do you know whether this recycling is happening in an environmentally-sound manner?

Electronics companies have long considered the environmental impact of their products. However, many of their stakeholders believe that electronics producers need to step up their efforts to keep pace with the problem, which is concentrated at either end of the product life-cycle. About half of the 700 chemical compounds required to manufacture one computer workstation are hazardous, according to a shareowner resolution filed with IBM (ticker: IBM) by the Calvert Group.

At the other end of the life-cycle, only 11 percent of the 20 million computers that became obsolete in 1998 were recycled, according to National Safety Council estimates cited in Calvert's IBM resolution. The council expects this year's computer obsolescence to more than double the 1998 estimate, surpassing 40 million units. And electronics recycling programs vary in their degree of environmental responsibility.

Calvert has filed similar shareowner resolutions with four other computer companies: Hewlett-Packard (HWP), Gateway (GTW), Apple (AAPL), and Compaq (CPQ). Calvert is also negotiating with Dell (DELL), possibly avoiding the necessity of filing a resolution there. Calvert Senior Social Research Analyst and Acting Director of Social Research Julie Gorte characterized the resolutions as requesting further study.

"All we've asked the companies to do is a feasibility study for [post-consumer computer] collection, and then to study the options for reducing the amount of hazardous material that's put into the computers in the first place--which many of them are already doing in many ways," said Dr. Gorte.

Only IBM is trying to remove the resolution from its proxy by pleading to the U.S. Securities and Exchange Commission (SEC) that the issue hasn't been under consideration for over a year. "Whether it's on the proxy or not, we're going to be talking to IBM about this," said Dr. Gorte. "And believe me, if it's not on the proxy this year, just wait a year."

A new European Union law requires computer companies to reduce their use of hazardous components and pay for recycling of their products. "They see the handwriting on the wall," said Dr. Gorte. It is in these companies' best interest to take a proactive approach to establishing environmentally-friendly manufacturing protocols and take-back initiatives here in the United States. "Their worst nightmare is for fifty states or God knows how many hundreds of localities to make their own rules and have them all be different," continued Dr. Gorte.

As of now, many computer companies (including IBM, HP, Compaq and Dell) have take-back programs in place. The main obstacle to their success is financial: consumers must pay between $10 and $35 for the service. Scott Cassel, director of the University of Massachusetts-based Product Stewardship Institute, considers this charge a significant disincentive, and has devised an alternative way to finance product recycling.

"Government agencies working with the Product Stewardship Institute prefer that the cost of new products sold include in it the cost to manage the used product at the end of its useful life," said Mr. Cassel. The institute also favors creating incentives for companies to change their product designs to incorporate less hazardous materials.

However, Dr. Gorte pointed out that computers represent only the tip of the electronics iceberg. E-waste also includes smaller electronic items, such as cell phones and palm pilots. As well, emerging technologies such as digital television are creating obsolescence in larger items.

"When everybody starts scrapping their TVs, this is gonna be like, 'Hey, if you liked El Nino, you'll love climate change.' It's a much bigger problem than just computer waste," said Dr. Gorte. "So this is the starting point--this is the stake in the sand, if you will."


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