As a record heat wave broils the Pacific Northwest and the region braces itself for another harrowing wildfire season, climate change has once again been dominating the headlines. The barrage of bizarre, extreme weather events we’ve witnessed in the recent past, including the freak blizzard that hit my home base of Austin, TX in February, rightfully has many worried that we may already be facing down the consequences of global warming. The other side of the narrative says we are experiencing natural climate change that the earth has experienced for millions of years.
The governmental efforts to curb global carbon emissions have been patchwork at best, leaving, somewhat ironically, large-scale corporations to set their own sustainability goals and hold themselves accountable. This was certainly the case over the last several years when it was unclear if the U.S. would remain in the Paris Climate Agreement. During that time, several of the companies I follow closely announced their own ambitious climate goals and strategies. One such company is Dell Technologies, which last month shared its annual Environmental Social Governance (ESG) report, detailing the progress the company has made towards its sustainability targets. I wanted to share some of the highlights.
The first topic highlighted was a macro one—the establishment of Dell’s ESG Strategy. Dell says this governance strategy will give oversight to the highest levels of the corporation and strengthen the ties between Dell’s social/environmental priorities and its business progress. Part of Dell’s ESG strategy involves working to shape standards alongside regulators, the business and the industry at large.
A few examples cited by Dell include its joining of the WEF Stakeholder Capitalism Metrics program, designed at the 2020 World Economic Forum in Davos to outline the standard metrics for reporting sustainable value creation and other non-financial disclosures to investors and stakeholders. Such disclosures in need of standardization include company performance against ESG indicators, tracking contributions towards SDGs, and more. Smartly, instead of inventing entirely new standards, the project is intentionally basing its standards on pre-existing ones from the industry’s leading standards setters. Instead of going through the hassle of getting everyone on the same page with something entirely new, the project is pushing for the convergence of disparate previous strategies.
As someone who covers multiple tech firms’ efforts in this domain, I’ve worried about standardization before in my coverage. Are these companies playing by the same set of rules? Do they measure their carbon emissions using the same metrics? Sustainability for one company could look very different to another. For accurate comparative analysis, there must be standards for reporting progress.
In regards to governance, Dell also shared a letter it submitted to the U.S. Securities and Exchange Commission (SEC) in response to the commission’s request for comments around the regulation of climate change disclosures. If interested, you can read that here.
Progress Made Real shoots for the moon
Dell’s ESG strategy tracks to its social impact plan, “Progress Made Real,” which outlines its various sustainability goals—some of them moonshot, and others more easily achieved. On the more ambitious side, Dell has pledged to reuse or recycle an equivalent product for every product it sells to a customer by the year 2030. By that same year, Dell says recycled or renewable material will comprise 100% of its packaging and over half its product line.
Another ambitious Progress Made Real target is addressing the well-documented STEM gender gap. Dell has set a moonshot goal for people who identify as women to comprise 50% of Dell’s global workforce and 40% of its global “people leaders.” We learned in the report that as of FY21, 31.8% of Dell’s global workforce identifies as women, which amounts to a 0.7% increase from the previous year—admittedly still a ways to go and hence, a “moonshot”.
Again, Dell considers these goals to be “moonshots”—a term coined in 1949 when the U.S. could only dream of putting astronaut boots on the lunar surface, let alone get them back home safely. Other moonshots in recent memory include the massive, worldwide, open-sourced approach in the scientific world to craft a viable Covid-19 machine, or years earlier, to map out the entire human genome. Climate change is perhaps the most daunting threat we’ll face in our lifetimes and it will require all-hands-on-deck effort if we hope to mitigate the worst-case scenarios.
Net-zero carbon by 2050
In the past year, Dell also announced its commitment to achieving net-zero greenhouse gas emissions, Scopes 1 (direct emissions), 2 (purchased emissions) and 3 (supply chain emissions), across its complete value chain. While a crucial reduction to accomplish, Dell did not lump this in with the so-called moonshots, meaning that it likely sees this goal as either more easily attained or simply non-negotiable given the stakes of our warming planet.
Going back to the standards thing—Dell emphasized that “not all net-zero goals are created equal.” The company cited the need to aim for science-based targets and touted that it was one of the first twelve businesses whose reductions goals the Science Based Targets initiative (SBTi) approved. Dell also pushed the point that carbon offset activities cannot exclusively achieve an ideal net-zero target. As Dell sees it, carbon offset should be an option only for canceling out the (hopefully) small remainder of emissions left after a business transforms its practices.
The 2050 goal is in line with the target put in place by the Paris Agreement, which also called for net-zero carbon by the year 2050. This is a challenging target to meet, considering how large Dell Technologies, the purview of its operations and the company’s standards for what net-zero should look like. That said, I’m confident it can get there, and I’m even interested to see if it can make it happen a little sooner. Amazon’s recent sustainability report outlined a 2040 goal for its own net-zero carbon moment, and that’s arguably a more significant task for the online retail giant.
The progress outlined in Dell’s new ESG report shows that in FY21, it had reduced its greenhouse gas emissions by 26% from the FY20 baseline. Its ongoing efforts include making energy efficiency improvements to infrastructure, renewable electricity purchases, engaging with suppliers to help them achieve their own reductions.
Closing the loop
Dell also shared the progress it has made towards accelerating the circular economy, a sustainable business model that minimizes waste and maximizes resources by keeping them circling through the economy—used, reused, recycled, etc. In the past year, Dell says it used over 27 million pounds of sustainable materials in its products and packaging. Additionally, Dell has stepped up its use of reclaimed carbon fiber from aerospace applications, introduced bioplastics and deployed a pilot program for closed-loop aluminum. Some detail provided on the aluminum pilot: Dell’s recycling program returns old drives and uses the aluminum to build “new” base plates for new hard disk drives. Thus, saving the aluminum’s utility and keeping it in the circle.
The circular economy takes a definite reimagining of one’s business practices, but it can go a long way towards helping companies meet their sustainability goals if engaged correctly. It can even ultimately save IT departments considerable money. You can read more about the benefits of this strategy here if interested—it’s something I believe all businesses should be looking at if they’re committed to making sustainability an absolute priority in their organization.
As you can see, Dell Technologies has its nose to the grindstone when it comes to achieving its climate and sustainability goals. For that matter, it is continuing to set new, more ambitious plans as it makes more of a dent in its footprint. I like what I see in terms of the scope of Dell’s ambitions and efforts, and I like what I see when it comes to the governance side of things. For proper accountability, a business has to measure its progress quantitatively and share results with shareholders and the public. However, those numbers won’t mean much unless there’s a common standard for measuring and reporting. Dell is doing the good work on most all fronts, and I’m sure the planet appreciates it.
Note: Moor Insights & Strategy writers and editors may have contributed to this article.
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